PRIVATE BUSINESS

Broads Authority Bill  [by order]

Order for Second Reading read.
	 To be read a Second time on Tuesday 27 February.

Oral Answers to Questions

FOREIGN AND COMMONWEALTH OFFICE

The Secretary of State was asked—

Syria

Helen Jones: What recent discussions she has had with the US Administration on relations with Syria.

Margaret Beckett: In our regular and ongoing discussions with the United States, relations with Syria feature from time to time. The UK and the US have some of the same concerns. We would like to have an improved relationship with Syria, but that requires them to play a more constructive role in the region.

Helen Jones: I am grateful to my right hon. Friend for that reply. Does she agree that, since it is now increasingly difficult to persuade the public in Israel of the value of unilateral withdrawals from territory, one of the best hopes of forwarding the peace process lies in improving relations with Syria and persuading them to engage in constructive negotiations with Israel? Will she do all she can to persuade the United States to forward that initiative, particularly to persuade them that if a breakthrough can be achieved with Syria, that might influence in turn the Hamas members of the Palestinian Government?

Margaret Beckett: My hon. Friend makes an important and powerful point. It is certainly the case that most people would like nothing better than to see constructive negotiations taking place, as she suggests, to address some of the difficult and complex issues in the middle east. There is really no need for me to persuade the United States: the US, in common with ourselves, would like nothing better than to feel that there is a possibility of constructive discussion and negotiation with Syria over a number of these issues—not least, as my hon. Friend says, in the context of the influence on Hamas. Sadly, although we constantly look for signs that that is the approach, it is not yet as evident as we would like.

Malcolm Moss: Since Syria seems to continue to violate UN resolution 1701 by allowing the smuggling of arms into southern Lebanon, what effective steps are the Government taking to prevent Syrian interference in the fragility of southern Lebanon, to prevent the rearming of Hezbollah and, of course, to obtain the release of the Israeli soldiers?

Margaret Beckett: The hon. Gentleman will know that there are now more than 11,000 UNIFIL soldiers in Lebanon; he will also know that we are not direct contributors to that force, but we are nevertheless acting in support of it in so far as we can. He is right to say that there are continued and rather alarming allegations of continued flow of arms across the border. We are in continuing discussion with our colleagues, not least our German colleagues, who are active on the ground in that respect and we are doing what we can to help and support them. The hon. Gentleman will know that the concern that he has just expressed is shared by the whole international community—not least by the UN Secretary-General, who expressed exactly the same anxieties quite recently.

Doug Henderson: My right hon. Friend will be aware of the very close links between the Syrian communities and the Iraqi communities. She will also be aware not only of the historic links, but of significant migration from Iraq to Syria over the last three or four years. In her discussions with the Syrian Government, has she raised the issue of the Syrian relationship with the future in Iraq—looking to the time when there will, hopefully, be a withdrawal of troops—and asked the Syrian Government their view of the future political settlement within Iraq?

Margaret Beckett: First, my hon. Friend is entirely right—I know that he is aware of these issues from his ministerial experience—about the relationships between the communities of Syria and Iraq. He will know that not long ago Syria opened an embassy in Iraq, which we welcome. Perhaps more importantly, continued discussion between the Government of Syria and the Government of Iraq is taking place on these issues. For our part, we continue in dialogue with the Syrian Government to encourage them to adopt a better relationship with the Government and the people of Iraq and to recognise their responsibilities for helping the Government of Iraq to deal with the security situation and other problems there. We have not discussed possible future relationships with Iraq as a whole other than to urge support for the present democratically elected Iraqi Government.

Crispin Blunt: It is the view of the Syrian Government that the last serious negotiations over the Golan and Israel were stymied by the intervention of the United States. What is the Foreign Secretary's view? Would it not be better for us to support those members of the Syrian Government who are anxious to advance a deal and to act responsibility, as she has requested?

Margaret Beckett: Whoever may have been responsible for the breakdown of talks on previous occasions, everyone recognises that, as I said to my hon. Friend the Member for Warrington, North (Helen Jones), these issues can only and best be resolved through continued negotiation. The hon. Gentleman will know that proposals about what should happen in the Golan are part of the road map and would be subject to any final status decisions on the outcome of negotiations over that road map. There is certainly strong recognition that these issues are linked and that they are and should be part of the same peace process. The hon. Gentleman will know of the strong drive to reinvigorate that process.

Angus Robertson: Is the Secretary of State not concerned about regional security, including that of Syria, given the emerging reports about the US planning for a military attack on Iran? Do the UK Government not agree that military threats—

Mr. Speaker: Order. This question is not about Iran.

William Hague: Will the Foreign Secretary tell us whether any positive results came from the visit by Sir Nigel Sheinwald to Syria in October? From her opening response, it sounds as though no such positive results were achieved. Are there any further plans for such visits by envoys to Syria in the coming months? Given that the Baker-Hamilton report called for a new diplomatic offensive by the United States to engage Syria in constructive policies, and that the Prime Minister appeared to endorse those calls in his speech at the Lord Mayor's banquet in November, is the United States now showing any signs of being prepared to engage with Syria in that way, if the intention were reciprocated? Would it not be a great mistake for the United States not to be prepared to do so?

Margaret Beckett: There were indeed positive results, in that Syria expressed a willingness to become more constructively engaged with the Government of Iraq. Shortly thereafter, there followed a visit by the Syrian Foreign Minister to Iraq and further discussions between the two Governments. I believe also that it is not long since the President of Iraq went to Syria, and, as I mentioned to my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson), Syria has now set up an embassy in Iraq. So, yes, there were positive results, and we continue to look for further signs of Syrian willingness to act more constructively in the region. We therefore continue to keep under consideration whether there would be merit in further contacts in the coming months, as does the European Union, where there is much discussion on whether and how it would be possible to encourage a more constructive relationship with Syria. The question of whether the United States should have more contact with Syria, if the willingness to do so were thought to be reciprocal, is a matter for the Government of the United States.

Darfur

Russell Brown: If she will make a statement on the political situation in Darfur.

Jim Dobbin: What recent assessment she has made of the political situation in Darfur.

Ian McCartney: The situation in Darfur is completely unacceptable. We utterly condemn the violence targeting civilians and humanitarian workers. The Government of Sudan must stop their bombing. We are supporting the efforts of the United Nations and the African Union to achieve an immediate ceasefire; a political process to bring in the non-signatory rebel groups; and a hybrid African Union-UN peacekeeping force. Meanwhile, it is vital that the African Union mission in Sudan continue to operate. The UK remains one of its leading funders; we have committed £67 million to date.

Russell Brown: I thank my right hon. Friend for that reply. He mentioned the excellent work being undertaken by the humanitarian aid workers, and I want to raise the issue of the tragedy of the ongoing attacks on those workers, who are doing their utmost to help the beleaguered people of the Darfur region. What can the Government and their counterparts in Europe do to encourage more support and assistance, so as to prevent further such attacks?

Ian McCartney: In my answer, I described the measures that we need to take, but let us be clear that, following the attacks on 19 January, we made an immediate response. My right hon. Friend the Secretary of State for International Development condemned the attacks, we have written to the Sudanese Government to protest, and we are calling for the police and security officers responsible to face appropriate judicial action. In addition, the United Nations has condemned the attacks and the decline of security in Darfur. I hope that, in the discussions that will take place in the next few days, we shall be able to move forward on these issues to ensure that all aid workers can operate effectively without fearing for their lives.

Jim Dobbin: Does the Minister think that the time has come for sanctions such as travel bans and asset freezes to be imposed on Sudanese companies, and on those ruling party officials who travel around the world doing business?

Ian McCartney: I thank my hon. Friend for that question. We have made it clear that if the violence does not cease and if there is no co-operation towards achieving a political solution, we could move to tougher measures, including sanctions. Decisions on individual sanctions would have to be taken by the UN sanctions committee in New York, so I cannot comment on individual cases ahead of any such decisions. Let me make it quite clear, however, that we are prepared to move to that position.

John Bercow: Given that the Sudanese Government's genocide policy in Darfur has now spread to Chad and the Central African Republic, and that diplomatic sorcery by the regime has thus far precluded any concerted action to prevent the continued slaughter of black Africans, does the right hon. Gentleman consider that the time is now right for the European Union to apply sanctions on a selective and targeted basis against this most despicable regime?

Ian McCartney: I thank the hon. Gentleman for his question and the concern that he expresses regularly about the issue. We are very concerned about inter-ethnic fighting in eastern Chad and attacks by militias from Sudan. The UN has sent a technical assessment mission to eastern Chad that should report back on the situation in the next few days. The Security Council is now considering what steps to take next. As I said in response to the question from my hon. Friend the Member for Heywood and Middleton (Jim Dobbin), we are considering appropriate sanctions, but that would have to be done in the context of the United Nations.

Tony Baldry: How did we get ourselves into the crazy situation in which, effectively, the Government of Sudan have a de facto right of veto on any action by the United Nations? Some months ago, the Prime Minister espoused the concept of the responsibility to protect. Where is that responsibility in Darfur? It simply is not happening.

Ian McCartney: That is why so much effort has been made by us and others, and will be made by the Minister with responsibility for Africa in the next few days, to get agreement between the warring factions, including the Government, first, to end the bombing, and secondly, to engage the rebel organisations in the peace process. Indeed, there are two peace processes: the north-south dialogue and the Darfur peace agreement dialogue. While neither works effectively, an excuse is provided for the continuation of violence. That is why we have supplied humanitarian aid and been involved with the United Nations and other colleagues in bringing together the warring parties to find an effective way forward. It is a frustrating process, because 2 million people are displaced and 4 million need food and humanitarian aid. That is an international calamity, but hon. Members should rest assured that we are playing our part to bring the warring factions to the table and reach a settlement.

Chris Mullin: Is there any sign that the International Criminal Court has any plans to unveil its indictments against the Sudanese leaders alleged to be responsible for the catastrophe in Darfur? Does my right hon. Friend think that the time has now come for that to happen?

Ian McCartney: I am certain that the International Criminal Court will do that at the appropriate time, and we are supportive of that not only with regard to Sudan but in relation to those other countries for which indictments are either in the process of being submitted or of being dealt with. It is critical that those who are in the process of carrying out genocide have a clear understanding that they cannot act with impunity and that appropriate steps will be taken. First, however, an agreement to end the violence must be reached, so that the 4 million people affected can return to some form of normality and security and are not in fear of their lives every day.

Human Rights (Russia)

Danny Alexander: What recent assessments she has made of the human rights situation in Russia; and if she will make a statement.

Geoff Hoon: The Foreign and Commonwealth Office annual report on human rights, published on 12 October 2006, sets out a range of our concerns about human rights, democracy and the rule of law in Russia. We continue to engage with Russia on human rights issues, critically as necessary.

Danny Alexander: I am grateful to the Minister for that answer, and I am glad that he agrees that there are real problems with human rights in Russia, exemplified not least by the failure to find the killer of Anna Politkovskaya and the recent appointment of President Kadyrov in Chechnya. When the EU negotiates its new partnership and co-operation agreement with Russia—I understand that the negotiations are due to start this year—will he ensure that human rights are given a much higher priority, and that the provisions have real teeth, so that the next President of Russia takes such issues more seriously than the current one?

Geoff Hoon: We raise such issues regularly with our Russian counterparts—I was in Russia towards the end of last year and had some fairly firm exchanges with them. My right hon. Friend the Minister with responsibility for human rights attended a meeting in January at which such issues were discussed—again, critically, as I indicated. The UK continues to raise such questions regularly with Russia, and we urge our partners in the European Union to do the same.

Denis MacShane: Those of us who have wanted Russia to move to democracy and European values since the end of communism are now disappointed by its tactics, tone and bullying rhetoric. But is not the answer to work for a united position from Europe? Russia is playing divide and rule between the European capitals, and if we forged a common European approach to Russia, based on European and British values, we could talk face to face and ask it to back off from some of the positions that it is taking today.

Geoff Hoon: I recognise that my right hon. Friend has a long-standing interest in these matters. There is little doubt that the situation of human rights and democracy in modern Russia is rather better than it was under its predecessor state, the Soviet Union. We continue to discuss with our European partners and with Russia, both bilaterally and directly, how it can continue to improve human rights and democracy. As I have indicated already, it is a matter that we raise regularly when we have meetings with our Russian counterparts.

Malcolm Rifkind: Does the Minister of State agree that, despite the depressing deterioration of human rights in the Russian Federation, and although under Putin it will not become a genuine democracy, Russia today remains a far more open society than the old Soviet Union? Does he further agree that, if Margaret Thatcher was able to do business with Mr. Gorbachev's Soviet Union, we and the west can continue comfortably to do business with Mr. Putin's Russia?

Geoff Hoon: I made that first point in my previous answer. The Government judge that it is right to continue to engage with Russia, to have the opportunity of a dialogue and to raise concerns that we have about human rights and democracy. That remains the Government's position.

David Winnick: Surely one test of doing business with Russia is that the Russian authorities co-operate, hopefully, with the British police in the investigation of the death—it was almost certainly murder—of Mr. Litvinenko? What has been the attitude so far of the Russian authorities? Do they understand the concern that someone from Russia could have been murdered in the way Mr. Litvinenko was, and the suspicion that the Russian authorities, or at least those acting on their behalf, were responsible for his death?

Geoff Hoon: These matters are, obviously, subject to a continuing investigation. It is something that we have pressed Russia to take seriously. I am confident that they understand how important that issue is. In the United Kingdom, we will continue to pursue the investigation. It is something that we want to see taken up vigorously by Russia.

Greg Hands: The Minister mentioned that he had discussions at the end of last year with Russian authorities about human rights in Russia. What about human rights in other territories that were recently part of the Soviet Union, including central Asia, and the key role that Russia has, or should have, in promoting human rights there? What representations did he make there?

Geoff Hoon: I went to Moscow from Kazakhstan, which is one of the countries that the hon. Gentleman was perhaps thinking about. I have visited Russia in recent times. I am shortly to visit Ukraine. I hope that those countries are the ones that he had in mind. Issues of human rights are regularly raised by Ministers. I assure him that in each of those visits I had meetings not only with representatives of the Government but with representatives of civil society. Contrary perhaps to the implication that he is making, there is a vigorous discussion of the state of human rights and democracy in each of those countries, which I suspect would not have pertained during the existence of the Soviet Union.

Afghanistan

Patrick Mercer: If she will make a statement on the security situation in Afghanistan.

Kim Howells: The security situation in Afghanistan remains broadly stable. However, there are regions, particularly in the south, where Government authority has yet to be firmly established. To address that, UK forces have recently engaged in a number of missions aimed at extending the authority of the Afghan Government across Helmand province. We are taking the military initiative and are capitalising on steady progress by increasing the pace of our reconstruction and development efforts in Helmand province.

Patrick Mercer: I am grateful to the Minister for his answer. He will be aware that the outgoing NATO commander, General Richards, described the war as being very winnable. Can the Minister tell us what circumstances will have to prevail before we can say that we have won?

Kim Howells: That is quite a question. The ability of the Afghan security authorities to provide a measure of security in Afghanistan, which they are not capable of providing at the moment, would be one measure and a very important one. I know that the hon. Gentleman has considerable experience of Bosnia, for example. He knows as well as anyone in the House that, without that general level of security, it will be impossible for the economic reconstruction of Afghanistan to take place in the way that it should take place. I suppose the test ultimately will be whether ordinary people in Afghanistan feel secure enough to go about their daily business without fear of harassment from the Taliban or any other forces.

Ann Cryer: Will my hon. Friend comment on the proportion of girls who are currently in education in Afghanistan? Will he also comment on their security, and the security of their schools and their teachers?

Kim Howells: Across Afghanistan, there are millions more girls in education than there were during the Taliban times. They forbade the education of females; that was one of the most atrocious acts that they committed. Any teachers who were found to be teaching females—and, indeed, any teachers who are nowadays found to be teaching females in areas where the Taliban remain a strong presence—were usually killed, and usually killed in front of the children. That ought to be a reminder to all of us, lest we forget what kind of a regime does such things. We should do everything that we can to ensure that the Taliban do not return to power in Afghanistan.

Paul Keetch: The Minister is right to congratulate British forces, who are doing a superb job in Afghanistan, but does he agree that the security situation will be finally sorted out only when there is much better co-operation with the Pakistani authorities? Is he continuing to talk to General Musharraf and his regime to ensure that efforts are made to bring the cross-border problems to an end as swiftly as possible?

Kim Howells: The hon. Gentleman is right. It is vital that there be much closer links between the Pakistani and Afghanistan forces. I have been up to Waziristan, to Peshawar and the border at Khyber, to urge the sides to co-operate more closely. It is a wild and woolly place.  [Interruption.] Well, enough of the hon. Gentleman's constituents are to be found in Brecon, of course—as well as up the Khyber pass. However, I say to him that we often hear a great deal of misinformation about the ability and aims of the Pakistani Government in terms of their addressing security on their side of the border. It is a difficult border; it is one of the worst in the world to police, and they have made great efforts to do so. I am glad that there are now closer links between the Foreign Ministers of Pakistan and Afghanistan, as well as between President Karzai and President Musharraf, who are trying to forge some kind of arrangement that stops the constant leakage of Taliban and al-Qaeda forces across the border.

Mike Gapes: Will the Minister confirm that that border is extremely important, because there are tribal links on both sides and it is an open border? Does he agree that the Afghan Government need to do far more on their side of the border, in addition to the steps that the Pakistani Government have taken in recent weeks to increase the number of border posts on their side of the border?

Kim Howells: Yes, much more can be done. It is a woeful fact that the line of the border is still a matter of dispute. Therefore offers of increased co-operation that have been made by both sides have often been rejected by the other side because that would amount to a tacit recognition that that is the actual border. It would also help—I am sure that Members know the Government's feelings on this—if many of our fellow NATO members were to put up more assets and hardware. That might well help the efforts in the south. In respect of some countries, there are helicopters that might as well be parked up in leading European airports for all the good they are doing in some parts of Afghanistan.

Geoffrey Clifton-Brown: The Minister will no doubt recall that on 26 January last year the then Secretary of State for Defence, the right hon. Member for Airdrie and Shotts (John Reid), announced a deployment to Helmand of up to 5,700 troops. Since then, the security situation remains very difficult, there has been very little infrastructure-building in the south in Helmand, and opium production has increased by more than 60 per cent. Does the Minister believe that the policy pursued by the British Government at that time is still correct, or is he considering revising that policy to meet the aims and timelines of the London compact?

Kim Howells: As the hon. Gentleman knows well, the best laid plans sometimes have to be altered because of the force of events. I went to the south, to Lashkar Gah, long before British troops got down there. I visited a very small American fortress, and the Marines there were doing nothing much more than staying alive. I do not think that anybody had poked a stick into that beehive up to that point; well, we now have. Having 5,000 troops there, compared with 100 American Marines, makes a difference on the ground and causes a great deal more friction than would previously have been caused. The British forces are coping very well, and I was glad to see that they had a significant military victory overnight and this morning, and that they feel that they are properly equipped to carry out an exercise that is designed to bring sufficient security to Helmand in order to carry on with the reconstruction process that is vital to the area.
	A lot of work has been done. A lot of wells have been dug, and we are about to put new turbines into the Kajaki dam at the top of the Sangin valley, which will bring electricity to 1 million people. These are not insignificant achievements, and I very much hope that the hon. Gentleman will continue with his broad support for that policy.

Tom Watson: Peasant farmers in many areas in the south of Afghanistan are wholly dependent on the narcotics economy. Does my hon. Friend think that, as has been stated on both sides of the House, if we are to maintain security and thereby a platform to rebuild Afghanistan, any short-term disruption of that narcotics economy might create greater insecurity and drive peasant farmers into the hands of the extremists from whose grip we are trying to remove them?

Kim Howells: This is a very easy assumption to make, but if we are to take on what President Karzai has himself described as the single most corrosive element in Afghan society—the corruption, killing and subjugation generated by the narcotics trade—this issue has to be dealt with. It is not a simple fight involving just hearts and minds. For example, more than 3,000 men have been lost on the eastern border of Iran combating drug convoys armed with anti-aircraft missiles that are bringing heroin to Europe. This industry generates huge sums of money that is used in the most nefarious ways, so it has to be tackled in every way open to us, including through military activity.

Middle East

Alistair Burt: What assessment she has made of the prospects for progress in the middle east following recent talks

Margaret Beckett: We welcome both Saudi Arabia's efforts to broker a national unity Government through negotiations with Hamas and Fatah in Mecca, and President Abbas' efforts for intra-Palestinian reconciliation. We also welcome the trilateral meeting between Prime Minister Olmert, President Abbas and Secretary of State Rice. That and the Quartet meeting tomorrow illustrate momentum and the engagement of the international community.

Alistair Burt: Although any glimmer of progress is to be welcomed, do not Hamas-backed terrorists continue to hold Corporal Shalit captive after 240 days? Can the Secretary of State give any sense of international progress toward his release; and will she reconfirm that until there is acceptance of the Quartet's basic principles—recognition of Israel, denunciation of terrorism and the acceptance of previous Palestinian-Israeli agreements—there can be no recognition of the new Palestinian Government?

Margaret Beckett: There is continual discussion of the unfortunate case of Corporal Shalit, and constant pressure on those who hold him to release him and, indeed, the other two soldiers being held. From time to time, there are suggestions that release might be possible imminently, but it does not happen. However, I can assure the hon. Gentleman that this issue is raised continually and in a variety of forums. Everyone in the international community certainly recognises the need for the Government in Palestine to work with, and to be based on, the principles enunciated by the Quartet. People are holding a watching brief to see whether that can be delivered.

Louise Ellman: Will my right hon. Friend indicate what she believes to be Iran's role in the current attempts to restart negotiations between Israelis and Palestinians, and does she take seriously the statement by the President of Iran that he wishes to wipe Israel off the map?

Margaret Beckett: I do take that remark seriously, and anyone must. Whether it was intended literally or meant as a throwaway remark of some kind, it is utterly unacceptable from any quarter, still less from the president of a major country in the region. Iran does not appear to be playing a positive role in its general relationships in the region, and it is less involved in the ongoing negotiations than are—more positively—some other states in the region.

Brooks Newmark: Following the question of the hon. Member for Liverpool, Riverside (Mrs. Ellman), what pressure is being put on Iran to achieve Corporal Shalit's release? It is clear that Iran is implicated in that kidnapping.

Margaret Beckett: There are many stories about who might be implicated in the different kidnappings, but it is clear to everyone concerned that it is extremely unhelpful to the prospect of restarting peace negotiations that those three Israeli soldiers continue to be detained. The process by which they were detained was undoubtedly intended to derail peace negotiations and it would be good for all concerned in the region—not least the people of Palestine, who have undergone great difficulties particularly of late—if the release were to take place soon.

Richard Burden: Is not the reality of the situation that the international community has a choice about how it responds to the Mecca agreement? It can either see the movement that is there, and its potential for moving the peace process forward, or it can say that because pre-ordained forms of words have not been used, there is an excuse not to move the peace process forward. Does my right hon. Friend agree that if absolute and unequivocal recognition by each side of the other has to be the prerequisite for involvement in talks, the Oslo process could never have started if those conditions had been applied to Israel in 1993, because the Palestinians recognised Israel, but Israel did not recognise the Palestinians' right to a state?

Margaret Beckett: Where my hon. Friend is entirely right is that there is of course a choice before the international community and indeed all the players in the talks. That choice is straightforward, but difficult. It is straightforward in the sense that there is a possibility of progress towards negotiations along the path of peace and to establish a two-state solution, which in theory everybody wants. Alternatively, people can remain mired in the same bloodshed and dereliction that has gone on for so many years. My hon. Friend is right to draw attention to the fact that there have been other occasions on which there have been discussions about a peace process and in the end those talks have not succeeded. We would be wise to concentrate on achieving momentum for moves forward rather than on who let everybody down the last time. Let us try to ensure that nobody lets anybody down this time.

Michael Moore: The significant steps towards a national unity Government are very welcome, but everyone will agree that the three key principles of the Quartet must be adhered to. Following the question by the hon. Member for Birmingham, Northfield (Richard Burden), does the Foreign Secretary agree that it is important that the international community should show the Palestinian people that it recognises the progress that has been made? Surely this is the time for renewed efforts to sort out and extend the temporary international mechanism, so that we can deal with the growing poverty in the occupied territories, and for new efforts to persuade the Israelis to release the substantial sums of money that they have been holding back for the past year?

Margaret Beckett: May I first say to the hon. Gentleman that yes, of course, it is important that there is adherence. We have used the phrase that any such Government should be based on the Quartet principles, and I think that everyone recognises the importance of that. He will know that, of late, this Government have put in extra resources—both bilaterally and into the temporary international mechanism—and are urging the European Union to continue to do so, because we recognise the need to continue to address the problems experienced by the Palestinian people. I can certainly assure him that there is extensive and continued engagement with all parties quite widely across the international community. I think that the House will know that there are meetings in the region today with countries such as Saudi Arabia and Jordan. The Quartet meets tomorrow in Berlin.

Jane Kennedy: Although the Mecca accord is welcome, in that it appears to have averted a civil war in Gaza, does my right hon. Friend accept that it also appears that President Abbas was left with little choice other than to accept the terms of that agreement? I therefore welcome the comments that she has made indicating that she and our allies in the Quartet will maintain a strong line on the three principles. It cannot be right that a democratically elected Government maintain armed gangs in the streets of their own citadels.

Margaret Beckett: I can only echo the last point made by my right hon. Friend, but I would also say to her that I think that it was inevitable and right that there was pressure at Mecca to reach agreement in order to avoid what was clearly the very real potential danger of civil war, which would have been utterly destructive of everyone's hopes for peace. From that point of view, we should and do welcome—as the hon. Member for Berwickshire, Roxburgh and Selkirk (Mr. Moore) sought—the moves that have been made to stabilise the present situation, but there is still a great deal more that needs to be done.

William Hague: May I join the Foreign Secretary in welcoming the Mecca agreement? She referred a few moments ago to the meeting of the Quartet showing momentum and engagement with the peace process, but does she also believe that it will show unity and a united resolve? In particular, will it show a united resolve to continue to place Hamas Ministers under the maximum possible pressure to accept the principles of the Quartet and to show some credible movement in the direction of those principles before any normal business can be resumed?

Margaret Beckett: Yes, I think that we can be reasonably confident, because there have been very constructive discussions by the Quartet. One thing that I should take the opportunity to stress to the House, and of which I know the right hon. Gentleman is aware, is that, although we now have the Mecca agreement and so the basis for the formation of a Government of national unity, there is an enormous amount that needs to be done before the actual formation of such a Government, let alone before we can begin to judge their actions. There are quite a large number of ministerial and other appointments to be made and there are whole set of procedures to be gone through in appointing the Government. So there is a great deal still to be done. That is why I referred to the need to keep up the momentum and the engagement. The House may also be aware that we anticipate that President Abbas will be in this country tomorrow and we hope to have an update from him.

John McFall: Does the Foreign Secretary agree that any progress has to be underpinned by sound economic development policies and that the land ownership question is one of the biggest inhibitors to the peace process? Given the opportunity that she will have to meet Cabinet Ministers in the Israeli Government who are promoting the economic and financial benefits of Israel in this country, will she impress on them that, if they engage in meaningful, regional attempts to solve the land question, that could be the biggest boost to prosperity in the middle east?

Margaret Beckett: My right hon. Friend makes an important point and he will be pleased to know that a feature of the discussions that I have had recently with Ministers in the Israeli Government and others is indeed economic development and the recognition that, in order to hold out hopes for the future, we should not just seek to move the peace process forward, but seek economic development and a co-operative process in that context, so that people in Palestine—and indeed in Israel, but particularly in Palestine—can feel that there is a real prospect of a better future for themselves and their children.

European Union

David Gauke: If she will make a statement on the German presidency's work on the future development of the EU.

Philip Dunne: If she will make a statement on her response to the German presidency's work on the future development of the EU.

Andrew Selous: What the prospects are for the implementation of the proposals for the EU set out in Command Paper 7024; and if she will make a statement.

Geoff Hoon: The German presidency will take forward work on a wide range of issues, including climate change, energy security, economic reform and the future of the European Union. The Government's approach is set out in the Command Paper "Prospects for the European Union in 2007", which was placed in the Library of the House on 31 January.

David Gauke: Given that the German presidency appears to be determined to revive the European constitution, at least in a revised form, would the Government support proposals for a new EU Foreign Minister, a new EU diplomatic service and a new post of EU President?

Geoff Hoon: As I have made clear to the House on several occasions, discussions are continuing about the extent to which the treaty could be revived in either its existing form, or any revised form. There is no consensus among member states at this stage. As soon as there is any such consensus, I will obviously report the matter to the House.

Philip Dunne: I listened to the right hon. Gentleman's reply with great interest, but I am afraid that I am none the wiser. Does he agree with his right hon. Friend the Home Secretary that the EU constitution is a dead parrot, or does he support the constitution?

Geoff Hoon: I am sorry that I am not able to add to the hon. Gentleman's intellectual understanding. I would be trying the patience of the House if I were to repeat my answer. However, I refer him to what I said a few moments ago—he will find that I have already set out the answer to his question quite clearly.

Andrew Selous: On the subject of climate change, the Command Paper calls for
	"a practical, ambitious Action Plan incorporating emission reduction targets."
	Given that many more Britons and Europeans are forecast to fly across Europe, how are the Government pressing the EU to improve the affordability and availability of train travel as an alternative?

Geoff Hoon: There is a substantial EU commitment to improving high-speed rail links throughout the European Union. A significant amount of European taxpayers' money goes into such projects. Those routes are important alternatives for travellers throughout the European Union, as anyone who, like me, regularly catches the Eurostar between London and Brussels and Paris will find.

Paddy Tipping: Will my right hon. Friend comment on the Prime Minister's recent discussions with the German Chancellor on climate change? Is it not the case that the EU emissions trading scheme should be widened and deepened and that we need to move quickly to a post-Kyoto settlement?

Geoff Hoon: That is certainly one of the United Kingdom's ambitions as we discuss the way forward on climate change with Germany, which holds the EU presidency for the moment, and with other member states. My right hon. Friend the Prime Minister has led Europe on this issue and he continues to be determined to secure an agreement. I am grateful to my hon. Friend for his observations. An important aspect of the British Government's negotiating strategy during the German presidency is that we should achieve improvements, especially on the trading scheme.

Mark Lazarowicz: Do not the crises and conflicts in various parts of the world that we have been discussing for the past 45 minutes underline the need for greater effectiveness of the EU in international and foreign affairs? Will my right hon. Friend do what he can to ensure that he talks to the German Chancellor to try to bring forward proposals that would strengthen the European Union's ability to intervene on international issues?

Geoff Hoon: Certainly, I see no reason why we should not build on the considerable success that Javier Solana has made of his post. There was a good deal of criticism of his appointment, especially from Conservative Members, but he has demonstrated that it is important for the European Union to have a single figure with whom the United States and other countries throughout the world can communicate, especially on matters as vital as the middle east peace process and relations with Iran and Russia. He has been an outstanding success and I pay tribute to the work that he has done.

Gisela Stuart: Will my right hon. Friend confirm that one of the British Government's priorities in negotiations about institutional changes to the European Union is still to bring the rotating presidency to an end and to appoint a permanent President of the Council?

Geoff Hoon: That was certainly agreed by all member states in the constitutional treaty. However, as I have indicated to the House before—not only today, but previously—negotiations and discussions are going on. It is important that we find the right way forward, but obviously that depends on a consensus among all 27 member states.

Graham Brady: Does the Minister believe that the future development of the EU should include the capacity to create criminal law?

Geoff Hoon: It has never been the British Government's view that criminal law is a central feature of the European Union's case law. However, there are relevant examples, especially in relation to environmental protection. There is a strong argument that organisations and countries that breach important principles of environmental protection could well face criminal law sanctions, although that is not something that the United Kingdom Government have necessarily yet supported.

Wayne David: Will the Minister indicate what progress has been made on a joint statement to commemorate the 50th anniversary of the treaty of Rome?

Geoff Hoon: Work is already under way in Berlin on a draft statement. We have made it clear on behalf of the United Kingdom that it is important that the draft statement reflect not only the achievements of the European Union over the past 50 years but set out its values and provide a vision for the future. I assure the House that as soon as a text is available it will be laid before the House for further discussion.

Afghanistan

John Pugh: Whether she has received reports of connections between relatives of President Karzai and drug trafficking from Afghanistan.

Kim Howells: We know that there are a number of individuals in both the Government and Parliament with links to the drugs trade. We are aware of media reports that those individuals may include relatives of President Karzai. The President himself has stated publicly that he is committed to acting against all those involved in the trade. The UK is helping the Afghan Government to improve their capacity to bring those involved to justice.

John Pugh: I thank the Minister for that answer, but given the fact that US military documents describe Wali Karzai, the President's brother, as
	"in the pay of drug lords",
	and given the endemic corruption in the Afghan Government, what new initiatives do this Government believe will improve governance in the country and international and local confidence?

Kim Howells: The hon. Gentleman is right to raise the issue of corruption, because wherever I have gone in Afghanistan the first thing that people say to me is that if the provincial governors, as a species, were honest, central Government's remit would be much easier to extend across the whole of Afghanistan—so corruption is enormously important. We have not, however, seen or come across any evidence that any relative of President Karzai is involved in the drugs trade and, as far as I am aware, none has been laid publicly before the people of Afghanistan.

Paul Flynn: When it was suggested in November that the Karzai Government were endemically corrupt, as Governments in Afghanistan have been for a couple of centuries now, with provincial governors and chiefs of police appointed by Karzai, including former warlords, former Taliban, one paedophile and people involved in the drugs trade, the defence given by the Defence Secretary was that there was one governor who was above suspicion and a man of great integrity. His name was Mohammed Daoud; he was sacked in December; he was the only one who could be identified as non-corrupt. Should we not be pressing for improvements in the Karzai Government before we ask more troops to die for them?

Kim Howells: My hon. Friend is right to say that Engineer Daoud, who was the governor in Helmand province, was a good man. He replaced somebody, Sher Mohammed, who was totally corrupt. He was the local warlord and ran the drugs trade in Helmand. The new governor appointed after Engineer Daoud, who, after all, served a year in the tough environment of Helmand province, seems to us to be a very honest and hard-working individual—

Paul Flynn: Is that why he was sacked?

Kim Howells: No, it was not the new governor but the old governor who was sacked. We have to take account of the fact, which my hon. Friend so eloquently conveyed, that this is not Surrey; it is Afghanistan, and it is a pretty rough neighbourhood. To say that we can do nothing there until we have proved that every single provincial governor is as pure as the driven snow is to be on the road to nowhere.

Douglas Hogg: Will the hon. Gentleman confirm that drug trafficking is relevant to the intensity of the fighting in Helmand province? Will he confirm too that many of our NATO allies are unwilling to provide reinforcements for British forces in Helmand? Does he accept that it was reckless of the Government to deploy British forces in Helmand in operational conditions without ensuring that proper reinforcements were available from the NATO countries?

Kim Howells: No, I certainly do not agree with the right hon. and learned Gentleman. Great care was taken in planning the operation in Helmand and the ISAF move to the province. We consulted closely the chiefs of staff and others who feel that they have the troops and the equipment to fight that campaign properly. The right hon. and learned Gentleman is right to imply that this is a real test of the resolve and credibility of NATO, and I am not sure that every NATO member understands the significance of that. If they did, I am sure that they would be far more ready to put more troops and more assets down into the south, where the real battle is going on at the moment.

Lebanon

Nick Palmer: If she will make a statement on the political situation in Lebanon.

Kim Howells: The United Kingdom continues to be concerned by the ongoing political instability in Lebanon. We have called on all sides to address their differences through peaceful dialogue. We support all constructive international mediation efforts to help resolve the crisis. The United Kingdom continues to believe that UN Security Council resolution 1701 provides the best framework for solving Lebanon's problems, and we are working with international partners to implement it.

Nick Palmer: During the short-lived war between Israel and Hezbollah, the world media and world Governments were all over the region, particularly Lebanon, attempting to solve the crisis, but world opinion has the attention span of a butterfly, and we now talk about practically everything but Lebanon, while there continues to be near civil war there. Will the Government reinforce their efforts to try to ensure that the situation does not spill over into a new crisis of the kind that we all faced a few months ago?

Kim Howells: Yes; I tell my hon. Friend that we certainly will. We are very concerned about the situation in Lebanon, and especially the continuation of disruptive activities by Hezbollah, which acts as if it were an alternative Government in Lebanon. It is heavily armed, and as my right hon. Friend the Secretary of State said earlier, we are worried about the way in which it has been rearmed through Syria. The latest intelligence indicates that it is up to its previous strength, in terms of the rockets that it has prepared to fire into Israel. It is a serious situation, and one that I will shortly have the privilege of investigating more closely.

Keith Simpson: The Minister just stated that the Government are concerned about the rearming of Hezbollah. Does he agree that one of the factors behind the destabilisation, and the activities of Hezbollah, is the direct involvement of the Iranian Government? That brings instability to Lebanon, and the Secretary of State for Defence has suggested the involvement of Lebanese Hezbollah, armed by Iran, in the killing of British troops in Iraq. What pressure are the British Government putting on the Iranian Government to cease that activity?

Kim Howells: As the hon. Gentleman will know, we have brought the matter to the attention of the Iranian Government many times. We know what bomb-making technology has been used in the Basra area and, as the hon. Gentleman knows, the fingerprints of Hezbollah and the Iranian revolutionary guards' bomb-makers are all over that equipment, and obviously we are concerned about that. We have made our views known in the United Nations and in other forums. The great problem is that the Government of Iran seem to be divided in two: there is a theocracy, and there is the elected Government of President Ahmadinejad. Our problem is trying to understand who is pulling the strings, and who is giving the orders to the revolutionary guards and to those who are smuggling arms to Hezbollah in Lebanon, via Syria. The issue is who is giving the orders, and who is pulling the strings. It is difficult for any nation to try to understand that, and to alter the activities of that Government and their agents abroad.

Association of South East Asian Nations

Nicholas Soames: What assessment she has made of the strength of UK relations with the Association of South East Asian Nations.

Ian McCartney: rose—

Hon. Members: It is the Little and Large show!

Ian McCartney: The wee man will answer the big 'un.
	The UK has strong relations with the ASEAN countries, both bilaterally and multilaterally. We have formal relations with ASEAN through the EU, via the EU-ASEAN dialogue, the Asia-Europe meeting and the ASEAN regional forum. To maintain UK-ASEAN relations, and to ensure that we are fully aware of current issues, I regularly meet ASEAN ambassadors and high commissioners. I will attend the EU-ASEAN Foreign Ministers meeting on 15 March.

Nicholas Soames: Given that the ASEAN countries have a combined population of 558 million and a combined gross domestic product of more than $850 billion, does the right hon. Gentleman consider that British representation is adequately furnished to ASEAN through the European Union? Should not such a vital market, where we have such enormous interests and which is developing at such a pace, have much bigger British representation on its own?

Ian McCartney: Let me reassure the hon. Gentleman that as well as multilateral relationships through the European Union for trade negotiations, we have bilateral relationships which provide increasing resources for United Kingdom trade and investment in all the countries in that region. As the Minister responsible, I can reassure the hon. Gentleman that a great deal of effort is going into putting new investment, skills and technology into those relationships. We have a growing trade relationship with all the ASEAN countries, except of course Burma, because of the specific circumstances. Those sanctions will remain.
	I will be visiting the region in the coming months, including Vietnam, in which I know the hon. Gentleman takes a specific interest. If he wishes to have a meeting with me before that visit, I shall welcome him to my rather rotund and large office in the Foreign Office, which will suit him admirably, to discuss issues relating to my visit.

Point of Order

Andrew MacKinlay: On a point of order, Mr. Speaker. Yesterday, the hon. Member for West Chelmsford (Mr. Burns) raised a point of order and drew attention to the fact that I had withdrawn from yesterday's Order Paper Question 20, which asked whether any questions had been drafted wholly or in part by a member of the ministerial team, and so on. The implication was that Thurrock had been buckled or sat upon by the ministerial team. I want to place it on record that that does not happen in Thurrock, and that the question will be asked again. I withdrew it for the old-fashioned reason of tactics. If it had stayed on the Order Paper, it would have received a written parliamentary reply, whereas I want an oral reply. The lesson is this: the Conservative Opposition is in a parlous state, the Labour party does not just provide the Government—

Mr. Speaker: Order. The hon. Gentleman has made his point.

Simon Burns: Further to that point of order, Mr. Speaker.

Mr. Speaker: It is not a point of order. The matter has nothing to do with the Chair. The hon. Gentleman had a bite of the cherry yesterday, and a return match took place today, so we will call it quits.

Catholics (Prevention of Discrimination)

John Gummer: I beg to move,
	That leave be given to bring in a Bill to remove remaining legislative discrimination against Catholics; to make provision for the independence and freedom of operation of Catholic institutions; and for connected purposes.
	In a civilised society there ought to be no reason to introduce this Bill. If we proposed a Bill on the Floor of the House of Commons that would make it illegal for the heir to the throne to marry a Muslim, a Methodist or a Mormon, that would be intolerable in a free society, yet the heir to the throne is still not allowed to marry a member of what is, on any Sunday, the largest worshipping community in this country. That is an insult to the Catholic community because it suggests that, somehow or other, being a Roman Catholic means being less of a citizen than someone belonging to any other religious denomination.
	I admit that I feel ashamed that I did not introduce the Bill before, when I was an Anglican. Since becoming a Catholic, I have recognised what the attitude towards this denomination means. For that reason, I am trying to make up for the history. It is not just a question of who the heir to the throne may marry or who the Queen or King may be. It is pretty ridiculous that the king could be a Scientologist, which is manifestly intellectually difficult and religiously rubbish, but cannot be a Catholic, which is intellectually difficult and religiously correct. This is wholly unacceptable, and I do not think that anybody believes otherwise.
	One discovers other things in the woodwork when one looks into the matter. For example, it used to be true that no Catholic diocese could have the same name as an Anglican diocese, even though those dioceses had, shall we say, been borrowed. In 1927 that measure was apparently removed, but it turns out that it was not removed. The Act says that naming a Catholic diocese the same as an Anglican diocese is no longer punishable—it is just illegal. That is a peculiarity, and it is also insulting. The Catholics called the diocese—now the archdiocese—of Southwark that name because there was not an Anglican diocese there, so when the Anglicans decided that they wanted a diocese in Southwark, it was perfectly all right for them to call it Southwark, despite the fact that there was a Catholic diocese, so the measure is not there to make matters easier for people. The Catholic diocese of Newcastle, although the cathedral is in Newcastle, has to be called Hexham and Newcastle, even though the centre of the diocese is in Newcastle. The Catholic archdiocese of Liverpool happens to precede the Anglican bishopric of Liverpool. It was perfectly all right for the Church of England to use the same name, but it was not all right the other way round. I do not think that it is terribly important, but it is insulting.
	I also considered some of the orders of chivalry. I am rather more interested in these historic matters than some of my supporters, including the hon. Member for Thurrock (Andrew Mackinlay), might be, but it is odd that no Catholic has ever been appointed to the order of the thistle since the middle of the 19th century when—I may have got this wrong—the Marquis of Bute, who later became a Catholic, happened to be appointed to that order. It is particularly odd when one realises that the order was created by King James II, who happened to be a Catholic. This is a peculiarity. There are all sorts of corners of our life that are as they are in discriminatory terms because this central matter remains.
	I do not believe that there can be any hon. Member who does not find it odd that the Prime Minister was unable to explain why in 10 years of anti-discriminatory legislation he did not find time to add on the bottom of any one of those Bills "and Catholics". The Under-Secretary of State for Constitutional Affairs, the hon. Member for Lewisham, East (Bridget Prentice), who is kind enough to be here on the Front Bench, gave a peculiar answer to—in this case—my hon. Friend the Member for Thurrock when she more or less suggested that there was not any real reason to bother about all this, and that really it was not important. It is important—as you, Mr. Speaker, in your persona, as against your public office, know perfectly well—because it says something about Catholics that was not true to start with and is not true today, and ought not to be part of our law. This is not a passing matter; it is very important.
	We must go back beyond that and consider what discrimination is about. Discrimination is about saying, "I am better than you are because my views are right and your views are wrong." It is the opposite of toleration. In Elizabethan England— and before that in Henrician England—the King was divorced not just because he had the hots for Anne Boleyn, but, more importantly, so that he could say that he had a right to it and that it could have a moral justification. He invented that moral justification and he told people that they had to believe that if they were to be citizens.
	I hope that some people have thought rather carefully about our present parallel, because we are beginning to be the kind of state that is doing that again. It is saying that one has to hold certain views if one is to be a proper citizen. I want to give one example because I happen to disagree with my Church on it, so it is a good example to use. I think that it is right to remove the discrimination against same-sex couples in relation to adoption, but I also think that we should be tolerant of people who do not agree with that.
	Toleration is hard—it is not as easy as some politically correct people believe it to be—and it is very easy to tolerate people with whom one agrees. That is a wonderful kind of toleration. It is the kind—I do not think that I am leaving behind my socialist and Labour supporters when I say this—that we have often seen from perhaps the most illiberal Government that we have had as regards civil liberties. I have always voted to the left of this Government on civil liberties matters, which is very embarrassing for me and for my constituents, who do not quite understand it. I have to explain that this Government are not willing to understand the meaning of liberalism. Liberalism is about accepting the views of people whom one does not like and of people with whom one fundamentally disagrees. That is why I beg this House to recognise that we are going down the same route as Elizabeth and Henry VIII went down, which is to say: "The state knows about these things, and if you disagree about the things that we think matter, then I am afraid that you become a criminal." That is the reality of such discrimination.
	The Bill brings together the two things that matter at this moment: a removal of historical discrimination, which defaces this nation today; and a statement that in future we will be the kind of country that allows people of any denomination to conduct their Churches, institutions, religious houses and what they do according to the faith of their fathers, and not to be told by other people that secular morality supervenes and that they must accept an alien orthodoxy. This is about what Henry started and what Elizabeth did, which was to say that orthodoxy was determined not by the faith of the citizen but by the decision of Parliament and the state. That way lies totalitarianism—a refusal to accept that toleration means realising that people feel passionately about important things and that in a free society they ought to be able to uphold those things. My Bill would get rid of historical discrimination and guard against the insidious future discrimination that arises from political correctness, which is itself a kind of fascism.
	 Question put and agreed to.
	Bill ordered to be brought in by Mr. John Gummer, Andrew Mackinlay, Jim Dobbin, Daniel Kawczynski, Mr. Julian Brazier, Mr. Mark Hoban, Mr. John Hayes, Mr. Edward Leigh and Miss Ann Widdecombe.

Catholics (prevention of Discrimination)

Mr. John Gummer accordingly presented a Bill to remove remaining legislative discrimination against Catholics; to make provision for the independence and freedom of operation of Catholic institutions; and for connected purposes: And the same was read the First time; and ordered to be read a Second time on Friday 15 June, and to be printed [Bill 63].

Planning-gain Supplement (Preparations) Bill (Programme) (No. 2)

Motion made, and Question put forthwith, pursuant to Standing Order No. 86A(6) (Programme motions),
	That the Order of 15th January 2007 (Planning-gain Supplement (Preparations) Bill (Programme)) be varied as follows:
	1. Paragraphs 4 and 5 of the Order shall be omitted.
	2. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion two hours after their commencement.
	3. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement— [John Healey.]
	 Question agreed to.

Orders of the Day

Planning-gain Supplement (Preparations) Bill

Not amended in the Public Bill Committee, considered.

New Clause 1
	 — 
	Evaluation of effects in Scotland

'The provisions of this Act shall not have effect until HM Treasury and the Scottish Executive have carried out a joint evaluation of the effects of the Planning-Gain Supplement in Scotland, including its effect on agreements under section 75 of the Town and Country Planning (Scotland) Act 1997.'.— [Mr. Francois.]
	 Brought up, and read the First time.

Mark Francois: I beg to move, That the clause be read a Second time.
	The new clause is designed to delay the Bill's implementation until the proposed operation of the planning-gain supplement in Scotland has been jointly evaluated in a study by the Treasury and the Scottish Executive. Part of the reason behind the new clause is that although the Government have provided some detail about the operation of the proposed planning-gain supplement in England, they have given little detail about its operation in Scotland or, for that matter, in Wales.
	Ministers have given at least indicative figures for England showing that when PGS is collected, some 70 per cent. would be returned to the local authority that was asked to accept the development in question, while the remaining 30 per cent. would be redistributed to the region. It is important to note that when I pressed the Financial Secretary about that on Second Reading on 15 January, he conceded that it could mean a different region, so that the 30 per cent. regional component could be spent in another part of the country.
	However, we do not even have that amount of assurance about the operation of the planning-gain supplement in Scotland. The Government's policy is that the funds raised by the PGS will be collected by the Treasury, recycled to the Scottish Executive and redistributed by them in Scotland. There is therefore no guarantee that a community in Scotland that is being asked to accept large-scale development will receive any reciprocal benefit.

John Bercow: I am glad that my hon. Friend is pursuing the matter like a dog with a bone. He is certainly a ferocious Rottweiler. If the people of Aylesbury vale, including many of my constituents, are expected to absorb an additional 1,000 houses a year for each of the next 20 years—many, though not all, are willing to do that—it is cold comfort indeed for them to discover that a substantial proportion of the take of the supplement will be distributed to areas other than theirs. Up with that they are not willing to put!

Mark Francois: I agree with my hon. Friend. I return the compliment by saying that he has long been recognised as a Rottweiler on behalf of his constituents. Long may that continue. He is right in that at least part of the money in England will not go back to the relevant locality. It could even go to a different region. However, in Scotland, to which the new clause technically relates, there is no guarantee that any of the money will go back to the locality. For some Scottish constituencies, the position will be even worse.

John Gummer: I have read the Committee proceedings carefully, but I have not yet heard a commitment from the Government about the other 70 per cent. Have they made an absolute commitment not to fiddle around with the local government settlement so as to recover the other 70 per cent. merely by changing the figures, which would not require legislative interference?

Mark Francois: My right hon. Friend, with his experience as a former Secretary of State for the Environment, makes an important point. The Government have given us an indicative figure of 70 per cent. However, there is no guarantee of that in the Bill. Moreover, the Government have been somewhat vague about the mechanism's operation. Those of us who have experienced the changes in the local government funding formula in the past few years know that when they say initially that they will provide 70 per cent., they introduce floors and ceilings or resource equalisation. We would therefore start in theory with 70 per cent., but the Government could perhaps then alter the amount of grant to local authorities in lieu of that. The proposal provides few guarantees in England, let alone Scotland. My right hon. Friend was right to make that point.

Phyllis Starkey: The hon. Gentleman knows that the Select Committee on Communities and Local Government was concerned that 70 per cent. should remain in the local area of the development. However, does he accept that there are cases of, for example, a development occurring in one area and requiring the upgrading of a motorway junction in an adjacent area? That is one reason why it is sensible to retain the ability to spend a significant amount of money somewhere that is not in the actual local authority area of the development. The development may require money to be spent on enabling the provision of infrastructure outside the area.

Mark Francois: I understand the hon. Lady's point, which was also made in the Select Committee's report. Let me make two brief comments. First, there is no guarantee in the Bill, and secondly, the new clause relates to how the arrangements would operate in Scotland, and in Scotland there is not even an indicative 70:30 per cent. split.

Phyllis Starkey: My grasp of geography is not good, but even I know that Aylesbury is not in Scotland.

Mark Francois: If the hon. Lady's geography were that bad—

Mr. Speaker: Order. I know a bit about the geography of Scotland, and I know that Aylesbury is not there. We are discussing Scotland and new clause 1.

Mark Francois: You are right to call us to order, Mr. Speaker, but it is a pleasure to bring a smile to the hon. Lady's face.
	As I was saying, there is no guarantee that a community in Scotland that is asked to accept a development—perhaps a large-scale housing development—will receive any reciprocal benefit. In theory, a housing development in Glasgow could raise funds that would then be redirected to the Outer Hebrides.

John Redwood: Does my hon. Friend think that the provision will apply to either Scotland or England? I understand that a good many Labour Back Benchers think that it is a very dangerous proposal.

Mark Francois: My right hon. Friend has obviously had a peek at my speech. If he allows me to develop my theme, he may hear some echo of what he has said. In fact, he is entirely right, and the same point cropped up in the Committee.

John Gummer: rose—

Mark Francois: I see that my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) wishes to detain me, and I am delighted to allow him to do so.

John Gummer: Has my hon. Friend noticed that although we are talking about Scotland, and although when we discuss almost any Bill that does not apply to Scotland Scottish Members of Parliament are present and voting, there is hardly a single Scottish Member present today? [Hon. Members: "There is one."] If there is one, there is one, but as we are here to protect Scottish Members, is it not amazing that they are not here to help us?

Mark Francois: I am not responsible for the diary commitments of Scottish Labour Members of Parliament, who are obviously busy people, notwithstanding the fact that there are plenty of MSPs to do much of their constituency casework for them. Nevertheless, I am glad to know that we are here today to represent Scotland's interests as best we can.

Mark Lazarowicz: rose—

Mark Francois: I will gladly give way to the one Scottish Labour Back Bencher who is in the Chamber.

Mark Lazarowicz: I am grateful to the hon. Gentleman, although I suspect that if he were to do his sums, he would discover that the representation of Members from Scotland in the Chamber, in terms of proportion, is greater than that of Members from England or, indeed, Wales. I am also grateful to him for pursuing, in new clause 1, an issue that I first raised on Second Reading. Does he know whether the Scottish Executive have requested the resources that the new tax would give them?

Mark Francois: I can confirm that the Labour-Liberal Democrat coalition that runs the Scottish Executive did not ask us to table the new clause, but I can also confirm that their response to the consultation was highly critical. If the hon. Gentleman will be patient for a few moments, I shall illustrate that with a few direct quotations from the document, which I hope will help to satisfy him.

Mark Field: Will my hon. Friend give way briefly?

Mark Francois: I will give way for as long as my hon. Friend requires.

Mark Field: I know that my hon. Friend is not a partisan figure and would not wish to subject the Government to great criticism, but given the criticisms that our party faced in relation to the introduction of the community charge in Scotland back in 1989, does he not consider it rather paradoxical that Scotland is the testing ground for a policy that is likely to be highly unpopular for the very reasons that he cited earlier?

Mark Francois: We have already heard a number of references to history this afternoon, and my hon. Friend has provided yet another. I genuinely believe that there are concerns in the Labour party in Scotland about how the arrangements might operate in practice, and I tabled the new clause partly to facilitate debate. I shall attempt to set out the detail for my hon. Friend, but his point is well made.
	In England, the Government have said that the planning gain supplement will operate in addition to the established system of section 106 agreements. In Scotland, such arrangements are popularly referred to as section 75 agreements, in this case relating to the Town and Country Planning (Scotland) Act 1997. In England, the Government have stated that in return for developers having to pay the planning gain supplement, section 106 agreements will be scaled back—but conversely, they have been less forthcoming about how the system will operate in Scotland. Perhaps via our new clause we can tease more information out of the Minister this afternoon about how the Treasury believes this will operate on the ground north of the border.
	The reaction of the Scottish Executive to the proposed implementation of the PGS has, to say the least, been quite critical. In its official response to the original consultation on the proposed planning gain supplement in May 2006, the Scottish Executive—I reiterate that it is Labour-led and has Liberal Democrat support—commented that the new tax was "misconceived", that it would render otherwise sustainable economic developments "economically unviable", that it would place extra burdens on the delivery of affordable housing and that it would act as
	"a break on development in most areas of the United Kingdom."
	In a particularly telling quote, the Scottish Executive stated:
	"We see Section 75 agreements as a key tool in bringing improvements to accompany development at a local level and at the right time. This is, as you know, an area of devolved responsibility and we would be keen to preserve the full flexibility to design our policies on these agreements as we see fit."
	In addition, the Scottish Executive specifically requested an opportunity for greater communication with the Treasury on all of this, as our new clause actually suggests. As the Executive response stated:
	"We will be keen to work with your officials in gaining a greater understanding of the full implications of potential costs of this proposal in the devolved context—its practical workability, the costs to be incurred, the effect of differing planning systems and other policies and ensuring the effectiveness of the investment funded throughout the UK."
	In response to the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz), the Scottish Executive did not formally ask us to table the new clause, but in their response to the consultation they certainly asked for much greater clarification, so we have in a sense responded to their request in spirit, if not entirely by the letter.

Stewart Hosie: The hon. Gentleman mentions the Scottish Executive's response, which contained concerns about the difficulty now, and potential difficulty in future, of providing more affordable housing as land prices may be driven up by the proposals. The hon. Gentleman also referred to section 75 of the Town and Country Planning (Scotland) Act 1997, which states:
	"A planning authority may enter into an agreement with a person interested in land"
	and that any such agreement
	"may contain... incidental and consequential provisions (including financial ones)"—
	obviously, in respect of planning gain. What assessment has the hon. Gentleman made of the impact on land available for affordable housing? Is there any further information from the Scottish Executive to flesh out some of the concerns that were set out earlier?

Mark Francois: One of the concerns raised by the Scottish Executive in their response to the consultation was that implementation of the planning gain supplement might actually restrict rather than encourage the bringing forward of land for affordable housing. They have already commented on that particular point. When we come to Third Reading, I have some wider points to raise about that. I hope that the hon. Gentleman will be kind enough to follow me when I reach that point. It is true to say that the Scottish Executive expressed some reservations.
	It is not just the devolved Government in Scotland that have expressed reservations about how the PGS might operate north of the border. The Scottish Property Federation, the representative voice of the commercial property industry in Scotland, has also stated its opposition to the introduction of the planning gain supplement in Scotland. In a letter written to me only yesterday, Mr. David Melhuish, the director of the Scottish Property Federation, states:
	"The SPF opposes the introduction of the PGS in principle. We perceive PGS to be a tax that has been tried and failed on a number of occasions in the last 40 years and we believe it will add costs, complications and delay to the planning and development process. Neither does the SPF agree that the PGS will achieve the Government's declared objectives of bringing forward the supply of land for either residential or commercial development."
	The letter also states:
	"On behalf of the Scottish Property Federation I write to express our support for your proposed New Clause intended to delay the enactment of the planning gain supplement until a proper evaluation has been made of the relationship of the new tax to the existing Section 75 process in Scotland."
	The letter goes on to point out that the Scottish Executive have not committed themselves to scaling back section 75 agreements in line with the at least indicative commitment from the Treasury in England. Scottish developers are therefore concerned that they could face the double whammy of PGS plus being asked to provide money for unreformed section 75 agreements as well.
	4 pm
	On a related point, Mr. Ken Ross, the chief executive of Elphinstone Property Group, one of Scotland's major development companies, recently pointed out:
	"In Scotland we do not know how PGS will function at all alongside Section 75 agreements—whether for example they will be additional to Section 75 agreements or if we will see section 75s 'scaled back' as with section 106 agreements in England."
	Tellingly, Mr. Ross goes on to say:
	"Even if we get scaled back Section 75 agreements, we still have the potential for PGS to blunt rather than promote economic development. Instead of a developer agreeing and quickly delivering infrastructure appropriate to a particular development, we will have an uncertain sum paid to the Treasury, who will then recycle the same sum to the Scottish executive, who will in turn recycle an uncertain amount to local authorities—who, after all this process, are left with the task of delivering the infrastructure. This can only add delay, uncertainty and cost to the development process and this will only reduce the prospects for economic growth in Scotland."

John Redwood: Is my hon. Friend aware that when Ministers are asked why the supply of land will not dry up with the introduction of the tax, as happened before, they answer that the rate will be lower? Does not that show that the tax will still slow up the process somewhat, and that the only rate that would guarantee no slow-up is a zero rate?

Mark Francois: My right hon. Friend pushes me on the rate, and perhaps we should push the Minister on that question today. Throughout this process, the Government have not said, unless I have missed it, what the rate of the PGS would be. There is certainly no such commitment in the Bill. Perhaps the Minister will take this opportunity to enlighten us about the level at which the PGS will be levied, so that we can make a more accurate assessment. Thus far, however, there has been a deafening silence from the Treasury on the question that my right hon. Friend has just raised.
	It is not only the Scottish Executive and the Scottish Property Federation that have outlined their opposition to the imposition of the planning gain supplement in Scotland. Scottish Labour Back Benchers in this House have also expressed their misgivings about the Government's proposals. During the debate on the Bill in Committee, the hon. Member for Linlithgow and East Falkirk (Michael Connarty) expressed doubts about how the proposals would operate in practice. He pressed the Minister on how effectively any money raised would be recycled to the area of development in question, and on whether some of it might be diverted along the way—a process that he described as "filtration". He said that
	"if the Scottish Executive were to absorb some of the funds for their projects, the sum that goes to local authorities will be less than that under a simple section 75 agreement. I am concerned about that filtration system."
	I understand that the hon. Gentleman and his colleague, the hon. Member for Livingston (Mr. Devine), asked for a meeting with the Financial Secretary to the Treasury in order to express their concerns about the system and the effect of growth in Edinburgh on the areas of Falkirk and West Lothian. In Committee, the hon. Member for Linlithgow and East Falkirk went on to say that
	"those councils would need to provide social services and education for the people who would live in the houses that those areas are going to absorb, because of the pressure on Edinburgh. If there is any question of the designation or use of the money being wrong in terms of the priorities for the local authority, there will be a major problem with the measure being accepted in Scotland." ——[Official Report, Planning-gain Supplement (Preparations) Public Bill Committee, 30 January 2007; c. 42-43.]
	It is evident from all this that, in Scotland, it is not clear how the planning gain supplement that the Bill seeks to facilitate will operate in practice. The Scottish Property Federation, the Labour-led Scottish Executive and even Labour Back Benchers in this place—including, it should be noted, the successor to the originator of the West Lothian question—have expressed reservations about how the measure will operate north of the border. In the light of that, our new clause seeks to ensure that the Bill cannot effectively be implemented until the Treasury and the Scottish Executive have worked out between them in detail how it will operate on the ground and, specifically, how the well established Scottish section 75 procedure will be affected as a result.
	In the light of all these considerations, I hope that the House will be minded to accept our new clause as an addition to the Bill.

Mark Lazarowicz: As I said, I am glad to have the opportunity to express some concerns about the preparations that will be authorised by the Bill. I see no objection to trying to introduce a more systematic way of ensuring that the windfall gains from development are used to provide resources and infrastructure for the local communities that must bear the extra costs or consequences of such development. From my experience in Edinburgh, and from observing other authorities in Scotland—no doubt this is also the case in England and Wales—local authorities often do not benefit from the section 75 process as they ought to. Some local authorities are good at negotiating with developers to ensure that they do benefit; others are not. There are certainly arguments for a more systematic approach, and I do not see any problem with trying to introduce such a system. I hope that certain issues can be addressed when the proposed legislation finally comes forward as a substantive Bill.
	As I indicated on Second Reading and in my earlier intervention on the hon. Member for Rayleigh (Mr. Francois), I am concerned that we so far have little idea of how the Bill will work in Scotland. In England, and, I think, Wales, most of the sum raised—70 per cent.—would go back to the local authorities concerned. There is no such provision for Scotland; indeed, it has been made absolutely clear that it is intended that the sums should go to the Scottish Executive to spend as it sees fit—not necessarily to support infrastructure in any local authority, but to support any other project that it has in mind. The Scottish Executive may have expressed reservations about the proposal, but I suspect that were it to be given an additional financial windfall, it would not rush to hand it out to local authorities. The experience in my area is that the Scottish Executive has a more centralising approach to the redistribution of funds raised at local level than is the case south of the border.
	As Edinburgh has provided some attractive opportunities for development in the past—and will no doubt do so in future—the potential financial take from planning gain supplement tax could be substantial. My concern is therefore that sums might be recycled out of Edinburgh and perhaps spent in the constituency of the hon. Member for Dundee, East (Stewart Hosie), in Aberdeen or even further north, or on something entirely different. But that is not just a concern for a city such as Edinburgh; it was interesting that my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty) raised such issues in Committee. Because of the way in which development has spilled out from Edinburgh, I suspect that areas such as his might have even greater potential for planning gain, and for money to be raised from planning gain supplement. Similar concerns have also been expressed in relation to Glasgow, and probably all cities. Inevitably, in cities and the areas around them, there will be more potential for sums to be raised and then centralised at the Scottish Executive level.

Mark Field: If the idea is to ensure that windfall gains to developers are put into place, does the hon. Gentleman accept that it is much more desirable to do that over a period of time through a rate than on a one-off basis? His concerns go to the heart of the matter, as there must be a sense of transparency, which can only be at the most local level. In Edinburgh, as he knows, and in central London, as I know, there is often a desire for section 106 or section 75 expenditure to be dealt with on a ward-by-ward basis, let alone within a particular local authority. What are his views on that matter?

Mark Lazarowicz: I think that if I were to answer that intervention in detail I would stray from the subject of the new clause. I will try to avoid doing that. The hon. Gentleman gives an example of the wish to break down expenditure on a localised basis. That is perhaps an illustration of why there needs to be a more systematic approach to deal with the matter at a global level, rather than too local a level. There is always an attempt to break down the benefits and to benefit the local community most directly involved, but that does not allow that benefit to be expended on projects which will be required to make a development work properly and which cannot be immediately attributed to local communities. There is a strong case for having some centralised system, but that is a debate for another day, which we can have if a Bill on the substance of this matter is eventually introduced.
	As I have said, I am concerned that we do not know how the provisions will work in Scotland. I understand that Ministers have taken the line that the issue is to do with devolution, and it is up to the Scottish Executive to decide how such funds should be allocated if they are raised. I agree with that as a matter of principle, as a strong, consistent supporter of a Scottish Parliament and devolution. However, this proposal deals with a reserved matter: the raising of taxation. Therefore, it seems a little disingenuous to suggest that we can decide to raise the tax at UK level but have no view on how it will be spent at the Scottish level.
	We are proposing the measure at UK level. We could have an anomalous situation whereby we passed legislation here that effectively gave a new tax to the Scottish Executive, but the Scottish Parliament was not involved in the discussion about how that tax was going to apply in practice. If the Scottish Parliament is not going to have a discussion on the matter of principle, surely we should have it here, and be satisfied with the details of the proposals in so far as they will apply to Scotland.
	It would be extremely helpful to get some indication of how my hon. Friend the Minister sees the provision working in Scotland. I ask him to give us some more indication of the discussions that have taken place with the Executive, and to give some assurances that it is the Government's expectation that if the measure goes further, the financial benefits from the new tax will be allocated to the local authority or authorities most immediately affected by the development, and that the Government, or indeed the Executive, do not intend that such money should be centralised, as the present proposals in the Bill would allow.

John Redwood: The hon. Gentleman is making an interesting case about the community sharing in the benefits. What level of tax would he think represented a fair balance between the developer who is putting in work and effort and taking a risk, and the community, bearing in mind that the developer could put in a lot of effort, be turned down and lose money?

Mark Lazarowicz: It is difficult to answer that point because, as has been suggested in the debate, the relationship between the section 75 procedure and the sums that will be raised from the planning gain supplement has not been clarified at this stage. An indication has been given of how a relationship may apply between the section 106 procedure in England and the tax raised by developments in England. I cannot answer the question, because I do not know what the consequence of the measure would be for the section 75 procedure that currently operates.
	For all those reasons, we need to have clarification of how the measure would apply in Scotland. We cannot simply leave it entirely up to the Scottish Executive to decide and the Scottish Parliament in due course to discuss. We are today taking the first steps in authorising a new tax that would apply in Scotland, as it would in England, but in Scotland we do not know what effect it would have on the ground in terms of particular allocation of resources. We have to have some reassurance on those points, and some more information. I hope that if the Minister cannot provide the detailed answers today, he will at least assure me that the Government intend to make those points clear during the passage of any substantive legislation to take the proposals forward.

Vincent Cable: I shall speak briefly in support of the new clause that the hon. Member for Rayleigh (Mr. Francois) moved and set out clearly. I moved an amendment in Committee that sought to ensure that 100 per cent. of planning gain supplement proceeds accrued to the local planning authority in order to maintain the principle of local accountability and local benefit, and the Minister argued strongly against it on the grounds that a share of the revenue would be needed for spillovers and surrounding regional projects, but he reassured the Committee that a substantial majority of the revenue would none the less accrue to the local community. That was the basis on which the Government sustained their argument, but we now discover that that argument will not necessarily apply in Scotland. The Government have a little explaining to do as to how they will extricate themselves from that difficult and anomalous situation.
	Another question is raised. Devolution is an evolutionary process; it is not fixed, and powers change over time. I am struck by the fact that the Mayor of London has recently acquired planning powers that are not greatly dissimilar to those of the Scottish Executive. I raise the question—and perhaps the Minister can answer it—of whether Mayor Livingstone might seek to invoke the Scottish precedent in arguing that the receipts from the planning gain supplement should go to him, rather than to London local authorities. There might well be a simple legal answer to that, but it is a question that is prompted by this problem and I am sure that the Minister can give a clear answer to it.
	The hon. Member for Rayleigh raised a second issue, which he put very well so I do not have a great deal to add to what he said. It is that an anomaly in the devolutionary process is being created because there will be one instrument—the planning gain supplement—which will be a UK-level power, and a partly alternative and partly additional mechanism which is a section 106, or section 75, power, and which is devolved. In introducing the measure, the assumption has been that as planning gain supplement is introduced and expands, the section 106 role will contract; it will be confined to local infrastructure and affordable housing. However, it has never been clearly explained how that contraction will happen, and whether consequential legislation will be needed; it would presumably have to be introduced to limit the role of section 106 powers.
	Again, we have an anomaly in terms of Scotland; as the hon. Member for Rayleigh has explained, the Scottish Executive might well take a totally different view and might wish to expand the role of section 75 to have enhanced, rather than reduced, planning gain. If that happens, there will be a clear conflict between United Kingdom and Scottish functions. It is not at all clear that the Government anticipated that problem, or that they have an answer to it. I await the Minister's reply with interest.

John Gummer: It is important that we debate the new clause, not only because of its specific application to Scotland, but because in applying to Scotland it draws out for all of us some of the fundamental problems in the legislation as a whole. My hon. Friend the Member for Rayleigh (Mr. Francois) was right to explain that, because of the awkwardness in the relationship between UK legislation and devolved legislation— as the hon. Member for Twickenham (Dr. Cable) pointed out—the Scottish dimension shows up the fundamental awkwardness in the structure of the Bill.

Stewart Hosie: The right hon. Gentleman speaks about the fundamental awkwardness in terms of devolution. Is not the real issue the conflict between central Government, in this case the Treasury, and local government, in this case in Scotland, in that there is a determination and desire on the part of local authorities to advance development in their locales with a funding stream through section 75 planning gain, and there is a conflict between that sometimes good practice—and sometimes less good—and the demand for more tax revenue in the Treasury coming through the planning gain supplement?

John Gummer: I very much agree with that, but I put it to the hon. Gentleman that the problem has become even clearer since the Government have had to handle devolution, the Scottish Parliament and the Scottish Executive. In doing so, they have revealed that the fundamental problem is that they are a centralising Government who do not care about or trust local authorities at all. That is why I ask my hon. Friend the Member for Rayleigh to consider the question of the commitment not just to the 30 per cent. figure, but to the 70 per cent. figure. Of course, this issue is particularly relevant to Scotland, because nothing in the Bill enables us to be sure that any of this money will, in the end, get to Scottish local authorities. Nor do we understand, as the hon. Member for Twickenham said, what will happen in reality to a section 106, or section 75, agreement. Is this to be a new-found version of the withering away of the state? Is the provision just going to disappear? I can see nothing in the Bill to suggest that it will, which means that this fundamental contrast and conflict will remain.
	In Scotland, as in the United Kingdom as a whole, we have to get back to first principles. This planning gain supplement is of course nonsense. We have tried it at least three times before—probably four—and it has not worked. The only way in which the Government can justify its working in Scotland or in England is to say, "If we have a very small tax, nobody will notice, so the reasons why it never worked before will cease to exist." As my right hon. Friend the Member for Wokingham (Mr. Redwood) says, that might be true; however, the inevitable answer is that the one way to ensure that nobody will notice is to have no tax at all. However, that cannot happen if the Government will not let us in on the secret of how much this tax will be.
	I realise that it is very difficult to talk in these terms about what is a preparatory Bill for a planning gain supplement. However, in most preparations, we have some idea of what we are preparing for. If we are preparing for a birthday and we decide to make arrangements for the party—such as getting the balloons and having the cake made—we normally have a budget: we work out how much the birthday will cost and how we will raise the money. However, this is preparation without a budget, except for a sum that is related not to the "birthday party", but to the preparations themselves. That sum will be yet more money for the Government to spend on the subject about which they are most expert: the failed computer system. It will doubtless be more money for the information technology companies, which they can spend showing the Government that they cannot do what they want them to do.
	I and the people of Scotland want to know how much money we are talking about. What would 70 per cent. of that sum be, and how do we know that it will really go to the local authorities? What, therefore, would 30 per cent. of that sum be, and how do we know that the Scottish Executive will use it in the way that the United Kingdom Government say that they will use such money in England and Wales? None of that information has come our way. We cannot even work out the equation by analogy, because the Government have not told us about the 30 per cent. that they will get into the Treasury anyway. That is why the new clause tabled by my hon. Friend the Member for Rayleigh makes specific reference to a joint evaluation by Her Majesty's Treasury and the Scottish Executive. I want to know about that. I want to know what the Treasury intends to do not only with the money that goes to Scotland—that is obviously a matter for discussion between the Treasury and the Scottish Executive—but with the money that goes to England.
	It used to be said that such money will be used for regional projects. The hon. Member for Milton Keynes, South-West (Dr. Starkey) is absolutely right to say that we need to consider whether some of these schemes need money that is outwith local authorities, but she will agree that we would all be a bit worried if money raised in Milton Keynes was given to fund a proposed extension to a project in Liverpool, for example. That would be very difficult to justify, but when the Government talk of regions, that is what could happen. It could happen in Scotland too.
	The issue is important for the credibility of the system. The Minister will have some fair words—or even some nasty words—about it, but the truth is that most people are frightened of development. They would prefer it not to take place. One of the ways to get people to accept development is to suggest a direct connection between development and an improvement in their lives and the area in which they live. If we are to have a system in which 30 per cent. is removed and given to the Scottish Executive or the Government without any reference to what it will be used for, it will be more difficult to get people to accept that development.

Phyllis Starkey: May I point out to the right hon. Gentleman that some people are keen on development because their area has a shortage of affordable housing? I invite him not to generalise and say that everybody is opposed to development.

John Gummer: The hon. Lady may have misheard me, but I said that most people disliked development. I declare an interest, in that I write on these subjects for  Planning and  Estates Gazette and that has been my profession since I was 22, so I have a long history of trying to understand planning and development issues. My experience is that the vast majority of people are suspicious—the French word is "méfiant"—of development proposals. That is generally true and in such circumstances one needs to make them feel that a development is proposed not just for the aggrandisement of the local council or the advantage of the developer, but that local people will gain something from it. That means some local injection of money, rather than the funds being spread about. That is especially true in Scotland—as the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) pointed out—which has a sad history of a centralising tendency. There is not quite the willingness to allow local authorities to make some of the decisions that one would hope that they might.
	We should wait to find out the facts before the provisions of the Bill take effect. The House is being asked to sign a blank cheque and the effect will be worse in Scotland. The Government are suggesting to the people of Scotland, and to the people of England and Wales, a process that is utterly alien to parliamentary democracy. The Government are asking for the right to spend people's money on something that they will not delineate, at a cost that they will not quantify and subject to a tax that they will not specify. The proposal will produce a sum that the Government will not name, that will be divided on a basis of which they are not certain and that will be spent in a way that they will not restrict. That is what the Government are asking people to vote for. That is an intolerable proposal.
	The only thing that is certain in the Bill is the bill for the preparation for something that may never happen. That makes this a very peculiar Bill. It is a mark of the seriousness of the state of governance of this country that we have got this far and most of the press have not noticed that peculiarity. If we are not careful, we will go on having such Bills, because they are very convenient for the Government. They do not have to tell anybody in Scotland anything about the issue. We have not been told how much will be raised in Scotland or how it will be divided. Nor have we been told whether the Treasury will get its hands on it. That is the most important thing for the discussion between the Treasury and the Scottish Executive. There is, of course, a significant financial subsidy for Scotland that comes from the rest of the British taxpayers. Does the Treasury have it in mind that, if the Scottish Executive get this money, it might revisit the Barnett formula? Might it have a look and see whether it could ante off this money?
	If I were a Scottish Member of Parliament, I would want to know that. I have to tell Scottish Members of Parliament that the daily conversation on the lips of my constituents is about whether it is reasonable for them to ante up the money in circumstances in which they have no control over its spending. I would not be at all surprised if there were a little gleam in the Treasury's mind that perhaps this is one of the ways in which it can right that wrong. If so, the Treasury should come clean. We want to know about it. But, then, it has not come clean on anything else.
	I am going to vote for the new clause if it is pressed to a Division, as I hope it will be, not just because I am a believer in devolution and I support the idea that Scotland should know where it is, but because I think that, if we allow this matter to get away from us on this occasion, we will also allow a whole lot in the Bill in general to get away from us. We are allowing the Government to come to the House with a Bill that contains nothing. It is as empty as the ten-minute Bill that I moved earlier. Aficionados will know that when one moves a ten-minute Bill, it has only a title and a long title. Between the First and the Second Readings, one puts in the bit about which one has spoken. The amazing thing about the Government is that their Bill has only a title and, in effect, a long title, and they have not bothered to put the bit in between.

John Healey: Has the right hon. Gentleman looked at the Bill and is he aware that it is a paving Bill? The matters that he is discussing would be matters for the substantive legislation that would have to follow if we made a decision to press ahead with a planning gain supplement.

John Gummer: That is exactly the point that I am making: this is a paving Bill in which the size of the pavement is not adumbrated. It is a paving Bill that tells us nothing about the cost of the possible proposals. It is a paving Bill that gives us no detail—

Mr. Deputy Speaker: Order. The right hon. Gentleman must speak directly to the new clause. The Third Reading debate will come a little later.

John Gummer: I beg your pardon, Mr. Deputy Speaker. I was led astray by the Financial Secretary, who seemed not to understand what was the fault of the Bill, which is not that it is a paving Bill, but that it is paving Bill that does not even have the substance of a paving Bill. The new clause would mean that the Bill would have no effect at all until we knew enough about it to make an informed decision—even about paving. Even those of us who are asked to be paviours deserve to know how much, how long, with whom and on what basis. That is all we ask and it would be reasonable for the Government to tell us.

John Redwood: The Government's proposal needs to be checked and I support my hon. Friend the Member for Rayleigh (Mr. Francois) in suggesting that there is a need for much more study and consideration in Scotland before it could possibly progress. I wish to talk about the effects mentioned in his new clause, which could be quite serious and difficult for Scotland. I was pleased that he drew attention to the evidence of the Scottish Property Federation, which clearly believes that, if the measure went through, it would reduce the supply of development and development land in Scotland at a time when people feel that there needs to be more housing built in Scotland and when the great cities of Edinburgh, Glasgow and elsewhere may need more development opportunities for additional office, commercial or retail space. It would be a great pity if the House allowed something to go through in preparation for a tax that would make that position worse rather than better.
	We are invited by the Government to believe that there are a number of people in Scotland currently sitting on land that might be suitable for development or buildings in the big cities that might be suitable for extension or demolition and replacement with better and bigger buildings who are not currently bringing those development opportunities through to the market but who, if a tax were imposed, would suddenly say, "Oh good. I can now pay a tax on my development, so I must rush off to the local planning authority to put in my planning application." I know that there are some very altruistic people in Scotland, but I think that that is just a little incredible.

Phyllis Starkey: Does not the right hon. Gentleman accept that there are some similarities between Scotland and the rest of the United Kingdom? For example, the Select Committee was told that there was ample evidence of land that had not been brought forward for development because of a lack of infrastructure. Given that the PGS is meant to fund the infrastructure, it would be perfectly possible for it to lead to sites that are not being developed at present being developed.

John Redwood: It is perfectly possible for developers and councils to get together and organise such developments through section 75 agreements in Scotland and section 106 agreements in England. I do not understand how introducing an additional tax into the system would make the situation better; it must make it worse.

Phyllis Starkey: Will the right hon. Gentleman give way?

John Redwood: If I can finish my point, I will of course give the hon. Lady a chance to rescue her rather bad argument.
	A section 75 agreement in Scotland is the natural way to achieve such development. Let us say that the tax is set at 30 per cent., which is the figure that I have heard bandied about. If 70 per cent. of that went back to the local authority—that would be 21 per cent.—the deal might be much less good than one that was achieved after negotiating a section 75 agreement, under which every pound would go into a piece of infrastructure that would clearly facilitate the development.

Phyllis Starkey: I simply draw the right hon. Gentleman's attention to the fact that the evidence that I cited came from the south-east county leaders. I believe that they are dominated by councillors of his party. They are worried that there are sites in the south-east that cannot be unlocked simply through section 106. They are quite keen on the PGS because it would raise much more money.

John Redwood: I do not happen to agree with them and I do not think that the tax would work like that. It would obviously reduce the flow of development proposals and development land, especially because I assume that my party would repeal it quite early on in the term of the next Conservative Government, which, I am pleased to say, looks rather closer in the light of recent opinion polls. That would mean that people naturally would wait until the unnecessary legislation had been repealed, after which they would reach a sensible agreement with the local authority whereby money would not be wasted, or leak out of the local area, under an especially cumbersome mechanism that the Government had invented.
	A lot of Labour Back Benchers—I only wish that they were here today—are very worried about the proposals. I believe that the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), who has a lot of experience in this area, is a strong critic of the proposal, and I think that his opinions are mirrored by many Scottish Members, just a few of whom are in the Chamber. They are worried for good reason; their local authorities tell them that the tax would reduce their opportunities to take section 75 money, in the case of Scottish authorities, or section 106 money, in the case of English authorities, and thus reduce their ability to direct and control the element of the gain that a developer was prepared to share through a sensibly negotiated agreement.
	I hope that the Government will think again. Rather like my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer), I think that we are not only considering a Bill that has virtually nothing in it, but wasting our time doubly, given that I suspect that the Government will think again and realise that many of their Back Benchers are correct that the imposition of such a tax into a complex system that proceeds by agreement at present would be far from helpful, but unhelpful.
	There is only one other possibility: the Government are being very Machiavellian and wish to hang out the spectre of a tax in the hope that that will get some of the people who have land with development potential to rush to their local authority before the tax is introduced so that they can pocket the gain before the taxman does. I understand how that might work, but I doubt that the Minister would be honest enough to say today that that is the Government's wicked plan. After watching Ministers and hearing their conversations with their Back Benchers, I fear that the Government do not even have a wicked plan. On this occasion, they have blundered into something that Labour Governments always do. They realise from historical research—history is not the strong subject of this Administration—that all the previous efforts have gone wrong, so they have come up with the silly idea that if there were a lower rate of tax, it might somehow not be so damaging. Such a tax might not be quite as damaging, but all tax is damaging in this situation. I wish to spare the people of Scotland from the proposal, so I have pleasure in recommending new clause 1 to the House.

Mark Field: I shall not detain the House long as all the important points have been made, not least by my hon. Friend the Member for Rayleigh (Mr. Francois) in speaking to the new clause.
	Inevitably, much suspicion surrounds any section 106 agreement in England or section 75 agreement in Scotland; I guess that the provisions are similar. Local residents are concerned that, under current arrangements, such agreements effectively are little more than a bribe that developers pay to the local authority. At least if the money goes to the local authority, one can rely on the fact that certain improvements will be made in the locality. If the money—30 per cent. or rather more—is now to go to the Scottish Executive, local residents will be even more concerned. It is clear that the focus needs to be on local benefits as far as possible, and it cannot make any sense that there will now be a middle man in the form of the Scottish Executive.
	The hon. Member for Twickenham (Dr. Cable) pointed out that the Mayor of London may see this measure as a precedent. He is already looking to expand his planning powers through the Greater London Authority Bill that is going through Parliament.
	I agree with the points made by my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) and my right hon. Friend the Member for Wokingham (Mr. Redwood) about the potential unintended consequences of the proposal. Inevitably, if there is to be another layer of tax, the reaction of any sensible, commercially minded developer will be simply to sit on his or her hands. That is how things have worked in the past.
	I accept the concerns expressed by the hon. Member for Milton Keynes, South-West (Dr. Starkey). One of the biggest concerns of us all, particularly those of us in relatively built-up constituencies, is the demand for more social or affordable housing. The reality in London, after six years of the Mayor of London's policy that there should be at least 50 per cent. social housing in large-scale developments, is precisely as I have pointed out: developers have decided to sit on their hands rather than go ahead with new developments and have watched as the value of their sites has risen yet higher. It has been the very worst news for the most vulnerable in our society, particularly in built-up areas. I think that we all appreciate that as our societies become ever more polarised between the extremely rich and the extremely badly off—I am sure that that applies in the constituency of the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) and in Glasgow constituencies—that is potentially something of a disaster.
	What the Government are proposing is a total mess. I fear that our new clause will alleviate matters only to a very small degree, but I hope that we will be able to vote on the matter, and that in this debate and on Third Reading we will be able to make a very strong case against this absurd proposal. It will be very bad for Scotland and for England. I am only sorry that, as a number of my colleagues have pointed out, there are not more Scottish Members present. One hopes that they would have been able to put the case even more robustly and defend their own interests.

Robert Smith: As one of those Scottish Members, I add my weight to the desire to vote on the new clause in an attempt to bring matters back to a more local level, at least by having more negotiation.
	Local government is best placed to see the impact on the local community of any development that it decides on, and section 75 agreements, rather than a centrally collected tax, are the best way of deciding how that impact is to be ameliorated and paid for at the time of the planning application.
	We can make an analogy between this proposal and the centralisation of the business rates, which also removed some of the debate about unpopular business developments and whether they would benefit the community. Councils looking at the wider benefits of encouraging business and its growth could see the impact of having new land available for business and office development, but at least in the days when business rates were collected and kept locally there was a straight local benefit that could be perceived. Similarly, the Government should recognise the benefits of section 75 agreements, which allow the local authority to assess its priorities in its own community for dealing with the impact of development.

John Healey: This short, one-page, three-clause Bill is intended simply to ensure the propriety of Government expenditure and that it is in accordance with Government accounting rules; it does no less and no more than that. Although I understand the interest that all hon. Members feel in the points that they have raised, they are precisely the points that were picked up in the thorough inquiry that the Select Committee on Communities and Local Government conducted on the policy area. They are precisely the points covered in the general consultation that we undertook in December 2005, and in the three further specific technical consultations that we undertook alongside the pre-Budget report in December 2006.
	None of the points and questions raised by the hon. Member for Rayleigh (Mr. Francois) relates to this paving Bill. He and others asked about the proportion and distribution of funds, and he and my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) asked about the operation of section 75 agreements, alongside a planning gain supplement. The hon. Member for Twickenham (Dr. Cable) was concerned about the contraction of section 106, and the right hon. Members for Suffolk, Coastal (Mr. Gummer) and for Wokingham (Mr. Redwood) were concerned about the rate of the planning gain supplement. There were also questions about the operation of the Barnett formula in respect of any revenues relating to the planning gain supplement. Those are all matters for the substantive legislation that would be required if we decided to proceed with introducing a planning gain supplement; that would be the time properly to examine the concerns that my hon. Friend the Member for Edinburgh, North and Leith urged us to ensure are debated.

Robert Smith: But if the House was unconvinced of the ideas in the Bill for which we are paving the way, it would make sense not to give the Government the powers set out in the paving legislation.

John Healey: All hon. Members will make up their own mind on the proposals before us, but I urge the hon. Gentleman and others to consider the fact that, this afternoon, we are being asked to make judgments on a paving Bill designed to ensure the regularity and propriety of the Government expenditure that would be necessary if we proceeded to introduce a planning gain supplement. The Bill will ensure that the proper preparations are in place beforehand.

Stewart Hosie: The Minister talks about the regularity and propriety of payments. This is just a paving Bill, but, as I understand it, the intention is that the supplement raised by the Treasury would be filtered back, via the Scottish Executive, to local authorities in Scotland, in one proportion or another. Why have the Scottish Executive been inserted into the loop when, at the moment, the local authorities simply collect their money? Why, under the new regime, do the Government not collect the money and simply pay it directly to the local authorities? Why have the Scottish Executive been inserted into the mechanism?

John Healey: I am surprised by the hon. Gentleman, who is generally well informed on such issues. The simple answer to his question is devolution. As he will know, as part of the devolution settlement, planning functions and the operation of planning legislation are a matter for Scotland, the Scottish Executive and the Scottish Parliament.

John Redwood: The Minister is an intelligent man, and he has studied the subject for a long time, so will he tell us how likely it is that the tax will be introduced?

John Healey: We have been pretty consistent about that. Clearly, the results of the three consultations, which close at the end of the month, will help to inform our judgment, but we have said that if we believe that a planning gain supplement is workable and effective, we will announce that we intend to proceed with its introduction.

Mark Lazarowicz: Planning is a devolved matter, but taxation other than local taxation is a reserved matter. I am quite happy with that, but I thought that the hon. Member for Dundee, East (Stewart Hosie) was not; he appears to have done an about-turn today. Will my hon. Friend the Minister at least give an assurance that the issues raised about the way in which the tax would apply in Scotland will be fully discussed in any Bill that is introduced, and will he assure us that the Government have an open mind on the subject?

John Healey: My hon. Friend would probably accept that we as a Government generally have an open mind. I can give him the assurance, as I have tried to do already, that the matters about which he is concerned will be discussed, should we introduce any substantive legislation to follow a decision to introduce a planning-gain supplement. However, because of the devolved nature of the planning responsibilities in Scotland as part of the devolution settlement, we do not wish to dictate, and I am sure he is not arguing for the Government in Westminster to dictate, to Scotland how it should use the proceeds of any planning-gain supplement to support infrastructure that could help with development.

Mark Field: The objection surely is that it should not be for the Scottish Executive to dictate to local Scottish councils how to use the money. The Government should not pass such an ill thought-through Bill, which effectively gives that power to the Scottish Executive without allowing local people and locally involved politicians to have their say on those matters, especially when, as several other Members have said, the measure is a blank cheque and we have no idea whether it will apply to 30, 50 or 100 per cent. of the money.

John Healey: First, I do not accept the hon. Gentleman's description of this rather simple Bill. Secondly, the devolution and the responsibility and powers to make decisions about planning matters are not dealt with in the Bill. They were settled in the Scotland Act 1998, which set up the Scottish Parliament and gave independence on various matters as part of the devolution settlement. That means that although the tax will be UK wide, there is nevertheless an important interaction with planning obligations and responsibilities for infrastructure and development, which will rightly rest in Scotland and with Scotland. The Scottish Executive and the Scottish Parliament, no doubt in detailed consultation with their local authorities, will make appropriate decisions about how to handle the revenues.

Mark Lazarowicz: I am grateful to my hon. Friend. He is being generous, and I am sure he appreciates that this is an important matter for my constituency and many others. If we should not decide for the Scottish Executive how it allocates the funding—a principle that I accept—surely there should be some parliamentary discussion of the measure somewhere. If it is not to be discussed in this place, will my hon. Friend consider providing for an order to be agreed by the Scottish Parliament before the measure comes into effect in Scotland? That would allow the Scottish Parliament to discuss the matter, if we cannot discuss it here in detail.

John Healey: If policy on planning in Scotland is not a matter for me as a UK Minister, clearly the conduct and operation of the Scottish Parliament is even less a matter for me. I know that the Executive and Members of the Scottish Parliament are examining the matter closely and will follow our debates, and I am sure the point that my hon. Friend makes will not be lost and will be considered by them.
	The hon. Member for Rayleigh does not do his case much good by misquoting the Scottish Executive. The Scottish Executive did not say that the planning-gain supplement was misconceived. It said that if it was misconceived, it might act as a disincentive. The hon. Gentleman laughs, but the distinction is rather important. I want to make sure that he is clear about that and that that correction is on the record.
	New clause 1 would delay the Bill's coming into effect. That might be the hon. Gentleman's intention, although he was not explicit about it. The new clause is designed to impede, rather than to improve, its operation. It would make the IT, staffing and preparation of systems that are necessary for any smooth, timely and efficient introduction much more difficult to achieve.

John Gummer: Would it not help the Government enormously if the preparations for IT and the like were held up, given the Government's history on the purchase of IT? Would not the new clause be of enormous benefit to the Government? Why does not the Minister accept it immediately? He would then not be in the same mess as some of his colleagues in respect of other IT projects.

John Healey: The right hon. Gentleman's argument cuts in exactly the opposite direction. The House has been reasonably and rightly critical of some Government IT projects, and the basis of some of the criticism has often been that the projects have been rushed and insufficient time has been allowed for preparation. The purpose of the paving Bill is to allow us to be in a position such that, should we decide to go ahead with the planning-gain supplement, we can begin the proper and necessary preparations from that day. To delay in that way would increase the risks about which the right hon. Gentleman is rightly concerned.
	The new clause is also unnecessary because the Government are well aware of the interaction of the planning-gain supplement with devolved policy areas, which for some time we have been examining closely with the Scottish Executive and the devolved authorities, even though it is not a matter for this Bill.

Vincent Cable: Do the devolved areas to which the Minister refers in the context of the interaction between revenue and devolution apply to Wales, Northern Ireland and London?

John Healey: The legislation applies to Wales and Northern Ireland, and London is part of England, with regard to which we have said that we will ensure that at least 70 per cent. of any revenues from the planning-gain supplement would be recycled to the local authority area from which they were raised.

Mark Francois: The Minister is summing up, but before he sits down will he say whether, as part of this detailed examination that he has just assured the House is under way, the Government have decided at what rate the PGS would be levied were it to be introduced? What will the rate be?

John Healey: The hon. Gentleman has asked that question a number of times. It would be part and parcel of any decision on whether to go ahead. It is clearly not a decision that we have been able or ready to take, so there is no answer to that question. We have said clearly that it will be levied at a modest rate that will not create disincentives for the sale and development of land but could raise additional revenues that would support the development and infrastructure that is necessary if we want to see the development, particularly of housing, that this country badly needs.
	The hon. Gentleman said that I was winding up, but I am actually just warming up, because there are one or two other points with which I should deal.

Stewart Hosie: May I take the Minister back to the discussions with devolved Administrations? He is right that planning legislation is devolved, but the implementation of planning law is a local authority matter. So before he moves on and warms up too much for the hon. Member for Rayleigh (Mr. Francois), will he tell the House how many Scottish local authorities he and his Department have been in discussion with so far in the preparation of this paving Bill?

John Healey: The operation of planning legislation in Scotland is clearly a matter for local authorities in Scotland. The passing and content of planning legislation is clearly a matter for the Scottish Parliament and Scottish Executive. The hon. Gentleman asked me a specific question, so let me give him a specific answer. I mentioned earlier the consultation that we published on the principle and outline of a possible planning-gain supplement in December 2005. We had 39 responses from Scotland and other devolved areas. They played an important part, as I will show in a moment, in helping us to develop our thinking, and influenced the proposals that we have set out.

Brian Binley: Will the Minister give way?

John Healey: The hon. Gentleman has only fairly recently come into the Chamber, but of course I will give way. He is generally a very regular attender in the Chamber.

Brian Binley: The Minister is very kind. I thank him very much.
	The possible levy to be applied has already been discussed in Northamptonshire, which the Minister will know is one of the areas that will be heavily affected by the sustainable communities project, with 167,000 new homes by 2031. It is worrying that people are already talking about £40,000 per house as a way of paying for infrastructure. Can the Minister give us some idea of whether it is likely to be that kind of figure? We have to go ahead with infrastructure for sustainable communities and we will need to know what money is available before we come back to the Government to say, "That ain't enough."

John Healey: A planning gain supplement levied at a modest rate that nevertheless raised additional revenue to support infrastructure is precisely the kind of source of additional funds that will be required to support the developments that we need in the hon. Gentleman's area and in others.
	On the wider application of the PGS to devolved Administrations, whether in Scotland, Wales or Northern Ireland, the Government have clearly reiterated several points that are worth setting out to the House. First, we have said that all PGS revenues from a devolved country will be returned in full to that country. Secondly, we have said that the devolved Administrations will have discretion over how PGS revenues from their country will be used to support infrastructure. That is not, as the right hon. Member for Suffolk, Coastal (Mr. Gummer) suggested, a fundamental problem, but a fundamental principle of devolution. Thirdly, we have said that we will undertake detailed further work with the devolved Administrations and with interested parties in those countries to examine the introduction of a planning gain supplement as regards areas of devolved policy such as planning obligation agreements, including section 75 agreements in Scotland and article 40 agreements in Northern Ireland.
	The new clause suggests that work with the devolved Administrations on how the PGS would operate across the UK has not yet been done. That is plain wrong—it is already taking place. We are currently undertaking the second round of consultations on the PGS. As I said, we received several important contributions to the first consultation, which have had an important influence on the way in which we have developed proposals since. The views that came to us from Scotland have been decisive in helping us to come to the view that Scotland should keep 100 per cent. of PGS revenues that may be raised there and that Scotland should have full discretion over the use of those revenues for supporting infrastructure in Scotland—commitments that have been welcomed by Scotland's First Minister. In addition, start notices, which are already a feature of the planning system in Scotland, could play a useful part in any PGS. On planning obligations, our proposal to use a common starting point from the negotiations on affordable housing also draws heavily on the approach that is already in place in Scotland.
	It is worth being clear that the Government do not propose, nor could we propose under the devolution settlement, to mandate how devolved policies are conducted. The determination of section 75 planning agreements would rightly remain the preserve of the Scottish Executive and the Scottish Parliament. Nothing in any proposed PGS policy, and certainly nothing in the Bill, would legally require changes to Scotland's planning policy.
	As the PGS would be a national tax applying across the UK, decisions on whether it should be enacted, and if so how, will be the preserve of this Parliament.
	The new clause is less about the Bill and more about the underlying policy of the PGS. The only major matter of substance in the Bill relating to Scotland is that Scotland is not specified in it. That is because preparatory expenditure needing new powers under the Bill would not be incurred by the Scottish Executive. The Bill itself will place no additional burdens or requirements on Scotland. Any introduction of a PGS, together with its application across the UK, would be preceded by debate and substantive legislation on the wider policy. That would provide the opportunity to examine in detail any concerns about the design and operation of a PGS.
	The Bill is a narrow, specific, paving measure. The new clause would frustrate its purpose and I hope that the hon. Member for Rayleigh will not press it. If he does, I shall have to ask my hon. Friends to oppose it.

Mark Francois: I am pleased to be joined on the Front Bench by my hon. Friend the shadow Secretary of State for Scotland, who has returned hot foot from a meeting this morning of the Select Committee on Scottish Affairs in Dundee especially to be here for the winding-up speeches on the new clause. Would that more Labour Back Benchers had turned up for the debate.
	The debate has been valuable in that it has allowed us to press the Government on how they believe that the PGS will operate in Scotland. It has also served to highlight the continued tensions between the Treasury in London and the Scottish Executive over the proposed implementation of the PGS north of the border.
	I have listened carefully to the Financial Secretary on the matter, but he has not entirely convinced me. Indeed, he has not convinced me at all. I also suspect that he has not convinced the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz), who reasonably asked him for more detail about the proposal's operation in Scotland. Despite that reasonable plea from the Labour Back Benches, we have been neither told the rate at which the tax would be levied in Scotland or anywhere else in the United Kingdom nor given any further detail about its implementation in Scotland or the proportions between the Scottish Executive and any locality that is asked to accept a development for which money might be earmarked or ring-fenced.
	Despite being given a golden opportunity this afternoon, the Financial Secretary has not added much to the sum of human knowledge about the PGS's operation in Scotland. I am therefore left with the thoughts of Mr. David Melhuish, director of the Scottish Property Federation, who concluded his letter of yesterday with a plea for continued opposition to the PGS and the hope that
	"In the Scottish context, the PGS is not taken further without proper evidence-based policy making."
	It is not exactly a secret on a par with the Trident codes that the Government are under considerable pressure in the run-up to the Scottish elections in May. I do not want to be accused of helping the Government out of their predicament. Nevertheless, it occurs to me that, given the weight of opposition to the PGS in Scotland, including from many Labour supporters, it might be sensible for the Government to draw back while they still can and announce their decision to abandon their misguided intention to proceed with the PGS in the United Kingdom, including Scotland.
	Having left the Financial Secretary with what I hope will be a genuinely lingering thought, I beg to ask leave to withdraw the motion.
	 Motion and clause, by leave, withdrawn.

Clause 1
	 — 
	Preparatory expenditure

Mark Francois: I beg to move amendment No. 3, in page 1, line 10 at end add—
	'(4) No expenditure shall be incurred under section 1 earlier than 90 days after the conclusion, on 28th February 2007, of the consultation exercises on the implementation of the Planning-Gain Supplement.'.
	The amendment is designed to delay implementation of the Bill for at least 90 days after the consultation exercises on the PGS have ended next week. It has been tabled partly because the Treasury still appears confused about whether it intends to proceed with the PGS at all. Nevertheless, as my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) said earlier, the Treasury is still asking Parliament to authorise expenditure to prepare for a tax that it has not yet decided to introduce. The money could ultimately go to waste if the Government do not intend to proceed.
	I want to press the Financial Secretary on a point that my hon. Friend the Member for St. Albans (Anne Main) made in Committee about the purposes to which the Treasury wants to put the money that would be authorised by the Bill and could be spent immediately after Royal Assent, which could theoretically happen as early as next month.
	Rumours are circulating in the media that, despite doubts about the PGS, the Treasury still wants the Bill because it would like to begin work on a new IT system, which could be used for alternative planning-related purposes if the PGS collapsed. The new planning permission that the Government recently proposed might be an example. Can the Minister give a firm commitment that the funds being requested by the Bill will be used solely for PGS-related work? I ask that partly because, following the hostile reaction that the proposed PGS has provoked so far, the Treasury appears to have been gradually backing away from its introduction in recent months. We were originally told that the Government planned to introduce the PGS in 2008, and the Treasury issued a consultation document in 2005 on how that might be achieved.
	The response to the Government's consultation was hardly encouraging from their point of view. The Institute of Directors called on the Government to drop their proposals, stating:
	"The proposals as currently envisaged are thoroughly bad both in principle and detail... the IoD feels that this additional tax would do nothing to help the housing supply".
	It also said that the tax constituted
	"a direct attack on business competitiveness, contrary to the Government's own stated objectives",
	and would
	"introduce an added bureaucracy to allocate the money as well as collect it."
	The Royal Town Planning Institute responded to the consultation exercise in a document entitled "Consultation Paper Exposes Folly of New Land Tax". It said:
	"PGS will create a polarity of investment between north and south, it encourages land-banking, creates inflexibility in the market and fails to support infrastructure planning."
	A detailed study of the proposed operation of the PGS was conducted by property experts Knight Frank on behalf of the British Property Federation, the Confederation of British Industry, the Home Builders Federation and the Royal Institution of Chartered Surveyors. Page 4 of its executive summary, produced last September, states:
	"It is clear that extensive further research is needed to achieve sufficient public confidence that that PGS would work effectively and meet the required increase in housing output. At present it is not clear that this would be the case."
	Perhaps in the light of that reaction, in the December 2006 pre-Budget report the Treasury confirmed that the proposed introduction of the PGS was to be delayed until 2009.
	By the time we reached Second Reading on 15 January, the Financial Secretary, introducing the Bill, had watered down the Government's commitment still further. He said:
	"Just as Kate Barker did, the Government have considered a range of alternatives. We will continue to do so, but at this point the PGS is our lead option."—[ Official Report, 15 January 2007; Vol. 455, c. 569.]
	So even the Government are now apparently backing away from their own idea, which has been downgraded from a proposal to the status of only a "lead option".
	To coincide with the delay announced in the pre-Budget report, the Treasury also announced a further three consultation documents on the proposed introduction of the PGS: "Valuing planning gain", "Paying PGS" and, in co-operation with the Department for Communities and Local Government, "Changes to Planning Obligations". The three consultations will not close until 28 February—next week—and presumably the Government will want to analyse the responses that it has received before deciding whether to proceed. The original consultation exercise produced some 700 responses, and we can assume that this exercise will produce quite a number as well. There is little point in seeking a wide range of opinions if the Government have already decided to plough on regardless, yet this evening they are still asking the House to vote for approval for preparatory spending before the consultations have even closed.
	During the 30 January Committee sitting, at column 11, the Financial Secretary assured me that if the Government did resolve eventually to press ahead with the PGS, they would do so by means of a separate Bill rather than including primary legislation in a Finance Bill. Given that, and on the assumption that there will be a Budget statement in March followed by a Finance Bill in April, the Government need not rush preparation of the necessary clauses so that they are ready less than two months from today. If the Government are now contemplating introducing a separate Bill to allow implementation in 2009 rather than 2008 as originally envisaged, they have further time in which to reflect on what to do, and therefore need not seek the approval of the House to begin spending public funds almost immediately. That is particularly important, as there is no expenditure limit in the Bill. The expenditure could be theoretically be open-ended, particularly if the Treasury continues to dither on whether or not ultimately to proceed with the PGS.
	The explanatory notes that accompany the Bill provide an indicative figure of up to £52 million for staffing in the procurement of an associated PGS IT system, but as the notes point out, they do not form a part of the Bill itself, so it is purely an estimate, not a cap. The actual figure could easily exceed the estimate, particularly if there are cost overruns on the associated computer system—a point that we debated in some detail in Committee and in relation to which recent experiences in the Home Office and the NHS are hardly encouraging.
	For instance, in respect of the new NHS IT system, Mr. Andrew Rollason, the health care practice leader at Fujitsu—one of the major contractors running the £20 billion programme—recently said of the new NHS system:
	"It isn't working and it isn't going to work".
	Even the Treasury's own IT system's projects are now running a collective total of 17 years late, which does little to inspire confidence that the estimates outlined in the notes will be adhered to in practice. At a time when our prisons are effectively full up, gun crime in inner cities is running out of control and most of our local NHS primary care trusts are under serious financial pressure, why are the Government requesting permission to spend £50 million or so of public money on a tax that they may never actually introduce?

Phyllis Starkey: May I draw the hon. Gentleman's attention to items that he left out of his list of things that are happening, such as the increasing housing crisis and the dire lack of affordable housing, particularly across London and the south-east? That might be related to the fact that the Government wish to have a tax that could fund the infrastructure.

Mark Francois: As the hon. Lady well knows, the provision of affordable housing has gone down quite a lot under this Government by comparison with their predecessor. One of the reasons for that is that the Government have failed to provide the resources. I would have thought that the hon. Lady, as Chairman of the Select Committee, already knew that.
	As I argued in Committee— [Interruption.] I will give way in a moment. The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) has only just entered the Chamber and I have already said that I will give way to him in a moment.  [Interruption.] I said in a moment.
	As I argued in Committee, the Bill puts the cart before the horse, so our amendment makes the case for delaying any expenditure in conjunction with the introduction of the planning gain supplement until three months after the latest consultation exercises have closed. The Treasury can then hopefully take those responses properly into account. I will now give way to the right hon. Gentleman, who is a former housing and planning Minister and who is firmly on the record as opposing the whole planning gain supplement concept.

Nick Raynsford: I would not want the hon. Gentleman to mislead the House by implying that there has been a reduction in expenditure on housing under this Government when compared with the record of the previous Government. He will be aware that there has been a very substantial increase in resources and that many of them have been allocated to improving the quality and condition of the existing stock, which was left in a very poor state indeed by the previous Conservative Government, whom the hon. Gentleman supported. I hope that he will recognise that.

Mr. Deputy Speaker: Order. Before the hon. Gentleman responds, I remind him that we are not conducting a general debate on housing, but discussing amendment No. 3.

Mark Francois: I understand that, Mr. Deputy Speaker, but if you will allow me, I have been accused of misleading the House, so I would like to explain for a few moments. My point was that, as I understand it, the number of new completions has gone down, although I take the right hon. Gentleman's point about refurbishment.  [Interruption.] The number of new completions has fallen over the past few years— I believe that that is correct.  [Interruption.] I shall move on.
	When the Treasury has received the responses to the consultation exercises and had 90 days—a reasonable period—to examine them, perhaps at that time, if not before, the Treasury will abandon the whole planning gain supplement and save us a great deal of further time and trouble as a result. In the meantime, I urge the House to support the amendment this evening and to protect the interests of the UK taxpayer while this dithering Government desperately try to make their minds up about what they are going to do.

John Healey: As the hon. Member for Rayleigh (Mr. Francois) has made clear, the amendment is designed to insert a three-month delay between the end of the current consultation, which is completed on 28 February, and the spending of any money that the Bill would then authorise. I understand the purpose of the amendment, but I hope that the hon. Gentleman will accept that it is at best unnecessary, and at worst may complicate things and create additional risk for the successful and sensible introduction of any planning gain supplement.
	I assured the House on Second Reading and in Committee that if the Government decided not to introduce the planning gain supplement, there would be no further expenditure under this legislation. I also want to make it clear, in response to the question that the hon. Gentleman has raised, that clause 1(1) of the Bill sets out the purposes for which expenditure under this legislation can be used, and that they are specifically and strictly related to preparations for the introduction of a possible planning gain supplement. They could not be used for an IT system for other purposes.
	The Government gave a commitment in the pre-Budget report that we would not introduce a planning gain supplement unless we considered it to be a workable and effective policy. Of course, the decision on whether the planning gain supplement is workable and effective will be informed by the responses to the consultation. I should remind the hon. Gentleman that a consultation is not simply a 12-week period in which the Treasury and the other Departments involved shut up shop and officials sit on their hands, followed by a period of frenetic reading and analysis of correspondence. On the contrary, it is a period of intense activity, particularly by officials who, during the consultation period, have been out meeting and discussing the issues with representatives of all sorts of interested groups right across the United Kingdom in order to determine their concerns about the matters under consultation. So, officials and others have been out there, explaining the proposals and listening to people's views on them. Many of the written responses to the consultation will formalise the views that we are already aware of and that have already been discussed, and which have been gathered during these meetings.
	The amendment would simply delay expenditure for up to three months beyond the end of this month, even if we decided to introduce a planning gain supplement before the end of that 90-day period. At best, that would achieve nothing. At worst, it would increase the costs of any IT systems by reducing flexibility and by increasing the time pressures involved in bringing in a planning gain supplement in an orderly and timely way. I hope that the hon. Gentleman will not press the amendment to a vote, but if he does I shall have to ask my hon. Friends to resist it.

Mark Francois: Our debate on amendment No. 3 has given the House an opportunity to press the Government on why they insist on pressing ahead with a request for the House to authorise expenditure in preparing for a tax that they have not yet decided to introduce. The sum of £52 million—or, potentially, even more—of public funds is a lot of money to shell out on what is only a lead option. By definition, another option might eventually be adopted instead. It would be preferable to delay any expenditure until the Government have definitively decided whether to go ahead with the substantive measure of the planning gain supplement.
	The Government's approach was criticised by Mr. Peter Bill, the editor of the  Estates Gazette, in a December 2006 editorial, in which he said:
	"In the face of a set of negative responses to a consultation paper, Ministers have baulked at driving a stake through PGS—well, for now. Instead they have executed the classic Whitehall manoeuvre: the introduction of PGS has been postponed for a year and no less than three more consultation documents have been issued. Read Paying PGS from the Revenue and weep."
	In the light of all that, we believe that the Government are indulging in what my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack) rightly described on Second Reading as "pre-legislative legislation". We have not been sufficiently persuaded on this matter, and I should therefore like to test the will of the House.
	 Question put, That the amendment be made:—
	 The House proceeded to a Division.

Mr. Deputy Speaker: I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.

The House having divided: Ayes 206, Noes 277.

Question accordingly negatived.
	 Order for Third Reading read.

John Healey: I beg to move, That the Bill be now read the Third time.
	This Bill is a short, straightforward measure. It is a one-page, three-clause paving Bill designed simply to ensure the regularity and propriety of Government expenditure in accordance with Government accounting rules—no more, no less. As a narrow preparations measure, it obviously has nothing to say about the underlying policy, nature or operation of a planning gain supplement, although many Members have had much to say about such matters during our deliberations. In fact, I welcome that level of interest, along with the expertise demonstrated in all parts of the House, which has contributed and will continue to contribute to our thinking on the policy of a planning gain supplement.
	We have approached the question of whether to introduce a planning gain supplement—and if so, how best to design it—with a degree of caution and a significant degree of consultation. We published a wide-ranging consultation document in December 2005 on the principle of a planning gain supplement, and on 6 December 2006 we published three further consultation documents. The consultation will close on 28 February. The Treasury Select Committee commended the Government on our measured approach to these proposals. It said:
	"We welcome the measured way in which the Government is consulting on and taking forward proposals for a Planning-gain Supplement."
	That process and approach will continue, but the Bill authorises three parties—Her Majesty's Revenue and Customs, the Secretary of State for Communities and Local Government, and the Northern Ireland Departments—to incur preparatory expenditure. Nevertheless, the burden of, and the most significant responsibility for, building the administrative systems—and, ultimately, for managing any planning gain supplement—will rest with HMRC. Its expenditure before the introduction of any further legislation will include new information technology for the planning gain supplement and the adaptation of its existing system; designing the business systems necessary to administer the tax, and putting in place appropriately skilled staff to manage it; and equipping the evaluation office agency and the Valuation and Lands Agency in Northern Ireland with the necessary facilities to help administer a planning gain supplement, including staff, training, accommodation and IT equipment.

Stewart Hosie: Will the IT equipment and systems be populated with data during this phase, and if so, will they include land-holding details? If so, will that not place a financial burden on local authorities and others—not least the Register of Sasines—in providing that information?

John Healey: The hon. Gentleman races ahead of the point that we have reached in speculative work on how a system might be designed, commissioned and developed. Authorisation for that next stage is required by this very paving Bill, but these administrative functions would have to be based on further substantive legislation, and properly tested and in place before the introduction of the planning gain supplement, which we have said will not take place before 2009.

John Gummer: If the system is not to be populated by information, is it to be unpopulated? If so, how do we know that it will work? I find it very difficult to understand what we are spending IT system money on if there is no information to populate it. Can the Minister explain what the system will do?

John Healey: I did not say that it would not be populated by information. Clearly at some point any IT system would need to be populated by information. All I said was that the hon. Member for Dundee, East (Stewart Hosie) was asking specific questions that were taking us several stages ahead of where we are in the process at the moment. A final decision on whether to introduce a planning gain supplement awaits the conclusion of the current round of consultations. The passage of this Bill is needed in advance of that decision and that is the purpose of bringing it forward. If we decide that we should introduce a planning gain supplement, we can start to design, commission and build the IT administrative systems immediately to support that, and increase the chances of doing so successfully and in a timely and cost-effective way.
	The Bill is not exceptional, in that the House has approved paving measures for policies that have been far less developed than our proposals for a planning gain supplement are at this time. Paving Bills are not unusual and are introduced where there is a need to incur expenditure in advance of the main legislation. Examples include the British Coal and British Rail (Transfer Proposals) Act 1993 and the Tax Credits (Initial Expenditure) Act 1998. More recent examples include section 137 of the Finance Act 2002, which authorised preparatory expenditure on a lorry road user charge, and section 324 of the Finance Act 2004, which gave authorisation to the Treasury to incur expenditure if we were to adopt the single currency. Clearly it is in no one's interest—certainly not the Government's—to proceed with the implementation of a planning gain supplement unless or until such time as we are satisfied that the policy will be workable and effective.

Mark Francois: The Financial Secretary has cited several paving Bills. Can he tell us, as an example, how much has been spent by the Treasury in preparing for the implementation of the single currency in the United Kingdom?

Mr. Deputy Speaker: Order. I really do not think that the Minister should be tempted too far down that route. I shall allow a brief response, but that is all.

John Healey: I am happy to take your guidance on that point, Mr. Deputy Speaker .
	The central question when considering whether to introduce a planning gain supplement is whether it would be workable and effective as a means of capturing the land value uplift that comes with planning permission to finance infrastructure and support growth. I reiterate to this House, as I have clearly stated before, that if the Government decide not to go ahead with a planning gain supplement, no further expenditure will be incurred under this legislation.
	The explanatory notes we published with the Bill set out the latest estimates of the possible cost of introduction. They are cautious, top-end estimates that are subject to change as the project is refined and the policy finalised. They also represent costs right the way through to full introduction and initial operation of a planning gain supplement, by which time of course there would have been full subsequent debate and legislation to authorise its administration.
	The Bill is simple and straightforward. It is a preparations Bill to allow the Government, pending further decisions on whether to introduce a planning gain supplement, to prepare adequately for the policy prior to its implementation. I commend it to the House.

Mark Francois: We now come to the Third Reading of this paving Bill, which is designed to help implement a planning gain supplement. This is not the first time the House of Commons has been asked to debate a tax on the increase in the value of land. The earliest specific example that I was able to find of such a measure was an Act in the reign of Henry VI, dated 1427, which facilitated a tax on the improvement in land values based on the construction of sewers. For the record, a similar measure was apparently also attempted under Henry VIII in 1531. To leap forward some four centuries, something like this was tried five times in the 20th century, and on each occasion it foundered, principally over the issue of how to agree on the valuation to be taxed. In debating this matter again tonight we are following in the footsteps of our legislative predecessors—with, I suspect, the same ultimate outcome at the end of the whole process.
	Coming right up to the present, we opposed this paving Bill on Second Reading and in Committee, and we remain opposed to it tonight. We remain opposed to the related planning gain supplement in principle for a number of reasons, which I laid out in some detail on Second Reading on 15 January, but which might be briefly summarised as follows. First, although it is supposed to assist local communities, it is designed to be centrally collected and then redistributed according to Government fiat. Secondly, in England a significant element of the tax is intended to be regionally administered by undemocratic and unrepresentative regional bodies. Thirdly, it is likely to hinder, rather than help, the creation of affordable housing, as the National Housing Federation has pointed out. Fourthly, it would be a highly complex tax to administer in practice, not least because of the likelihood—based on all historical precedent—of lengthy arguments over valuations.
	Despite the earlier debate in Committee and on Report this evening, the Government have not made a convincing case for their introduction of what even they admit is now only a lead option. If they cannot even convince themselves, how do they expect to convince the House? This is a Bill, and indeed a tax, with few friends. For instance, the CBI said of the proposed planning gain supplement:
	"the Government's proposals to implement PGS are likely to lead to a number of unintended and negative consequences that would outweigh the potential benefits of PGS and we would strongly urge the Government to reconsider its proposals."
	Similarly, the British Property Federation, which has been staunchly opposed to the planning gain supplement throughout, said that it
	"Is not suited to brownfield or previously developed sites; removes the linkage between the developer, the development and direct community benefit; can provide uncertainly in the planning process; is unworkable on most commercial developments; will slow the rate of developments coming forward; will discourage regeneration schemes; will create a blockage in the planning system; could lead to lengthy disputes in the courts and does not give any certainty that the necessary infrastructure will be provided."
	Other than that, the British Property Federation thought that the planning gain supplement was a good idea.
	Meanwhile, the Royal Institution of Chartered Surveyors said of the planning gain supplement:
	"The proposals are based on a misunderstanding of how land is valued, how planning gains arise and how the property market operates".
	The Chartered Institute of Taxation was equally unimpressed and commented as follows:
	"Not even a well thought out consultation document can save a bad idea and we think that the law of unintended consequences will apply, with the result that the proposals will not deliver the Government's policy objectives without a major element of compulsion being applied to local planning authorities, to allow developments that they do not wish to allow."
	The National Housing Federation, the umbrella body for housing associations, argued in 2006 in its evidence to the then Select Committee on the Office of the Deputy Prime Minister that the planning gain supplement would not assist the development of affordable housing. It is an expert in the area, and as it explained:
	"By charging PGS on affordable housing the Treasury will simply be pushing money around the public funding system....If PGS is levied on housing associations a proportion of housing association grant for social housing will effectively be paid back to the Treasury via PGS and fewer homes will be provided. Moving funds from one part of the public purse to another is not efficient."
	Similarly, there have been concerns about the effect on the charitable sector. The Charitable Properties Association—the CPA—argued on that point in evidence to the Communities and Local Government Committee. It stated:
	"The CPA believes the PGS will have a seriously detrimental impact on the financial position of property owning charities. This includes both charities which have significant land holdings as part of their endowment...and charities which develop their own land in order to fulfil their charitable purposes, for example by providing affordable housing."
	The Government's proposals still fail to address the fundamental weakness of this type of tax, which has foundered historically on the problems of agreeing the increase in land value on which it is to be levied. As the Royal Institution of Chartered Surveyors, which is a specialist in this area, has argued:
	"The valuation of development sites comprises of making assumptions about different variables, six of which can have a big impact on the opinion of value. A change of around 5 per cent. in each of these variables can result in an overall change in the value of the site of over 25 per cent."
	It is not just representatives of business and the third sector who have voiced their public opposition to the planning gain supplement. A number of prominent Labour party members and organisations have done so too. A previous Labour Minister with responsibility for planning and housing, the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), who is in his place this evening, is on the record as opposing the concept of the planning gain supplement. He reiterated his opposition during the Second Reading of the Bill on 15 January. If he will allow me, I will quote what he said:
	"Although this is only a paving Bill, it begins a process that is inherently complex and risky and that could end badly. I urge my right hon. and hon. Friends to take stock and give careful thought to all the issues involved, as well as the considered views of the people and organisations who best know the minefield that they are approaching. If they do so, they may well conclude that the alternatives available can generate better outcomes and save them from repeating the mistakes of the past. When history has such good lessons to teach us, it is unwise—to say the least—to ignore them."—[ Official Report, 15 January 2007; Vol. 455, c. 582-3.]
	Quite. When even well respected Labour former Ministers are sounding warning bells it is little wonder that the Government have paused for thought, yet they want the approval of the House to spend the money nevertheless.
	That is not the only objection to the tax from a socialist quarter. As we have already heard this evening, the Labour-led Scottish Executive have expressed strong reservations about the implementation of the planning gain supplement. Despite our giving the Minister a good opportunity under new clause 1 to lay out in more detail how some of the aspects would operate in Scotland, he declined to do so. Moreover, a joint memorandum was submitted to the then Select Committee on the Office of the Deputy Prime Minister in March 2006 by the Labour Housing Group and the Labour Land Campaign, the former of which describes itself as
	"A socialist society affiliated to the Labour Party, who aim to promote affordable housing".
	It is reassuring to know that socialists are still allowed to be affiliated to the Labour party. The memorandum states:
	"The PGS proposals combined with the package of reforms proposed for the planning system following the Barker Report will not address the problem of the shortage of affordable housing, a severe problem in the South West and many rural areas, including parts of Yorkshire, Derbyshire and Cumbria".
	On top of all that, the Library briefing note that accompanies the Bill points out that the "closest precedent" in terms of a similar paving Bill was the 1998 Tax Credits (Initial Expenditure) Bill, which led to the much troubled tax credits system, in which just under half of all the payments in the system each year are incorrect. In his Third Reading speech, the Minister cited that as a recent example of a paving Bill. The financial memorandum that accompanied that Bill nine years ago explained that expenditure of between £15 million and £20 million was required to facilitate the introduction of tax credits. Even allowing for inflation since that time, are the Government seriously arguing to the House that the preparatory work for the introduction of the planning gain supplement is likely to cost twice what was required to help bring in the whole tax credits system, which now equates to some £16 billion a year of public resources? If they are, that really tells us something about how complicated and bureaucratic the planning gain supplement is likely to be.
	As we have argued throughout the course of the Bill, most MPs across the House would accept that developers should make an adequate contribution to infrastructure costs in return for receiving permission to build, but the planning gain supplement is not the way to achieve that. As the  Estates Gazette argued forcefully about the planning gain supplement in December 2006:
	"Of course it won't work. It didn't work the five times it was tried in the past century and it won't work now."
	In advocating the Bill tonight, the Government are asking the House to commit an unlimited sum in preparation for an unpopular tax that does not itself guarantee that the full proceeds of any development will return to the area in question, and which in Scotland and Wales does not guarantee that anything at all will be returned to the affected locality.
	Perhaps that is part of the reason why so many organisations oppose the planning gain supplement. To remind the Minister, the Confederation of British Industry does not want it. The Institute of Directors does not want it. The British Property Federation does not want it. The Scottish Property Federation does not want it. The Royal Institution of Chartered Surveyors does not want it. The Royal Town Planning Institute does not want it. The Chartered Institute of Taxation does not want it. The House Builders Federation does not want it. The National Housing Federation wants it, but only if it does not apply to the federation. The Scottish Executive might want it, but only if it does not apply in Scotland. The Labour Housing Group does not want it if it applies to Cornwall, Cumbria, Derbyshire or Yorkshire. The right hon. Member for Greenwich and Woolwich does not want it to apply anywhere at all, and nor does my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer)—he would not want it even if it applied only to Protestants. No one wants it except the Treasury, and even the Treasury is not sure whether it wants it at all.
	Despite that wall of opposition, the Government's hesitation and the fact that they have downgraded their proposal from a definite way forward to only a lead option, the Minister still had the neck to ask the Commons to vote Supply of more than £50 million to prepare for the introduction of a tax with which the Treasury might never proceed. All that money might eventually be wasted, not least because the Minister assured us earlier that any IT procured would not be used for anything else.
	The Conservatives oppose the Bill, and the planning gain supplement to which it relates. We have stated clearly that if the Government are foolish enough to try to introduce a planning gain supplement, an incoming Conservative Government will repeal it. I hope that the House will spare us the trouble and put the Treasury out of its misery by voting against this benighted measure.

Nick Raynsford: I have to tell my hon. Friend the Financial Secretary that the reservations that I voiced on Second Reading remain real. I am speaking to express the hope that during the consideration that the Treasury will give to representations submitted during the course of the consultation, it will consider very carefully indeed reservations expressed by a wide range of authoritative commentators who believe that the Bill—it is, admittedly, a short paving Bill, as my hon. Friend emphasised—is taking us down a high-risk route and that it could well lead to an outcome that he, I and many hon. Members would deeply regret.
	I speak not from the point of view of someone who has any doubt about the merits of raising a significant contribution from the profits that accrue from development to fund necessary and desirable infrastructure and social provision that would enhance those developments. I wholeheartedly endorse the principle of ensuring that developers contribute towards a more sustainable and rounded development than would otherwise be possible and the principle that the community, as well as the developer, should receive a true gain from the process. The issue is not the principle of raising revenue from the profits of development to fund necessary infrastructure and social provision, but the mechanism by which those funds are raised.
	I know that the Government's argument is that the implementation of the existing system, which is largely based on the section 106 mechanism in England and the section 75 mechanism in Scotland, is patchy. I accept that entirely. However, I speak as someone who represents an area in which the mechanism has been used to good effect by a local authority that has been absolutely clear in its objectives and open in its relations with developers. It has wanted not only to ensure that there is a fair contribution—often quite a significant one—but to give the certainty that that contribution will go into the area concerned to deliver demonstrable and tangible benefits for the benefit of not only the wider community, but the developer.
	I have seen that happen in a range of areas. The millennium village in the Greenwich peninsula is widely spoken of as an exemplar of sustainable new development and high-quality housing. It has achieved high environmental standards and has a mix of tenures, with owner-occupiers, tenants and people on intermediate tenures living together in a harmonious framework. The attractive ecology park makes the area a desirable place in which to live. A primary school was taken in one form of its existence on to the site so that there would be a school there as and when residents moved into the development. The school has the capacity to expand to two forms of entry so that it can absorb the additional pupil numbers that come as a result of the development. A health centre provides high-quality health care for people in the new development. All that, together with the transport infrastructure, such as the Jubilee line and other transport facilities, makes the development highly sustainable.
	The development has benefited hugely from developer contributions, and everyone has seen the benefit of that. The developer has received a benefit because the contributions have made the development more attractive. People want to come to live in the area—they are moving not to a frontier town, but to somewhere with an attractive existing park, a school and a health centre that were in place from the early stages.
	The community has benefited from the contributions because it has such facilities, which was not the case for earlier developments that had far less good social infrastructure throughout their early stages. The development in the 1960s and 1970s in Thamesmead, in my neighbouring constituency, was often heavily criticised because it was predominantly residential and there was a shortage of the necessary facilities and infrastructure to allow a vibrant community to be in place right from the outset. A lot of work has been done subsequently to transform Thamesmead, but its start was not auspicious because of a lack of the extensive employment and social infrastructure that should have been in place at the beginning. We have learned lessons from history, and new developments in our area are being carried through in such a way as to ensure that developers make a significant contribution towards necessary infrastructure.
	As I have implied, developers are generally happy to pay the contribution, but there are few developers who are keen to pay. They see the benefits of the contribution and appreciate the certainty that if they pay the contribution, they will get their planning permission and have a development of which their new residents, tenants and occupiers can all be proud. There is a win-win situation.
	I can cite not only the single example of the Greenwich millennium village, although that is a fine example, because there are many others. Although the Meridian Delta Ltd. development on the same Greenwich peninsula has not yet begun, contributions have already started to be made towards improving road access to the site, which will be necessary to cope with the larger number of people living there. Although I am in favour of more sustainable forms of transport, some improvements to the road network were necessary. Those improvements are being funded in advance of the beginning of the development, but I am afraid that that would not be feasible under the formula proposed for the planning gain supplement, under which sums would be payable only at the start of the development. In addition, those funds would be payable to central Government, so it would probably take more time for them to come back to the locality. There is thus a question of timing. Developers are happy to make a contribution at the beginning of the process because they know that that is necessary to facilitate the development from an early stage.
	The question of valuation is the nub of the issue. The sites on the Greenwich peninsula that I have described were profoundly polluted before any development began. They were the relics of our industrial past—I think that the Greenwich peninsula housed the biggest gasworks in Europe in the early to mid-19th century. There was an enormous residue of heavy metals and other pollution in the land, so there were vast remediation costs involved in making development possible on the land.
	Of course, any developer who was faced with the prospect of paying the planning gain supplement would have at its disposal a bank of well-qualified advisers and lawyers who could identify all such offsetting costs and would be able to demonstrate, with extraordinary skill and facility, that when account had been taken of the remediation costs and the other offsets necessary to secure a successful development, such as discounted commercial lettings in the early years to ensure that tenants are found for properties, the uplift in value associated with the grant of planning permission would be either very small indeed, or perhaps nothing at all. However small the percentage take of planning gain supplement, a very small percentage of a very small or even non-existent figure is of no great value or even nothing. Yet there may well be very considerable downstream development gains. These are big developments that will only really come into their own over 10, 15 or 20 years, at the end of which profits will be considerable.
	The section 106 agreements being negotiated by my local council—with MDL in relation to the peninsula, with Berkeley homes in relation to the Woolwich Arsenal, and on other very big sites—take account of long-term profit and benefit, rather than simply the immediate uplift in value associated with the grant of planning permission.
	I therefore put it to my hon. Friend the Minister that in these examples there is a likelihood that a planning gain supplement introduced on the principles that the Government propose could well result in a reduced take overall, once the developers have demonstrated all the offsetting costs and the limitations on the increase in value attributable to the grant of planning permission. They will be able to minimise their potential contribution. There is a serious risk that on some of these sites the public sector take will be less than is being secured under the section 106 system.
	That would be a tragedy and a disaster. First, it would involve the parties—the local authority, the developers and the community—no longer working together harmoniously to secure benefits to the community. There would be a separate process in which there would no longer be an incentive for the developer to work positively and constructively to get the best outcome. The incentive would be for it to minimise its liability for planning gain supplement—that would be a natural reaction.
	Secondly, the local authority would be worried that it would not get sufficient money from its 70 per cent. share of the planning gain supplement to provide the infrastructure that it wanted to provide—and was able to provide using the existing section 106 framework. Those are genuine fears coming not from the developers but from local authorities and other practitioners who have been involved in facilitating development and using section 106 to secure benefits to the community. They fear that the planning gain supplement could deliver less than the current arrangements.
	That brings me to the obvious question: why are the Government introducing this measure? There are a number of reasons. One is the recommendation from the Barker report which suggested this option. If we look back at the context of that report, we may well feel that this is not one of the happiest of its recommendations. It was in many respects a trade-off because of other pressures on the planning system to deliver more houses. I am not sure that the mechanism will deliver, for reasons that I have already explained, or that it is entirely appropriate.
	I certainly think that the Government have got themselves into a position where the planning gain supplement is becoming a totem, and there is a risk that it will proceed despite all the reservations that have been widely voiced about its potential downsides. That will be because it has got into the currency, because the Barker report recommended it, because in responding to the report the Government said that they would proceed with it, because they consulted and following that they said that it was a lead option, and because they then introduced a paving Bill allowing them to take further steps.
	In my most pessimistic moments, I see a remorseless process, with the juggernaut going down the road through various stages and reaching a point where it becomes unstoppable. I fear that if that happens, we will find ourselves, in two or three years, seeing the introduction of a tax which has serious disadvantages, including its possible impact on certain communities, such as mine, which has benefited from the existing section 106 framework, and which will end up proving to be a problem that the Government could well have avoided.
	I hope that, even at this late stage, my hon. Friend and his colleagues in the Treasury will reconsider. I do not believe that section 106 is incapable of delivering the benefits that should be delivered to facilitate development. I have accepted entirely that the performance is patchy. We should be looking much more closely at options for sharing expertise, for sharing the good practice of those who are doing things well and for assisting those local authorities that are not currently making the most of the section 106 system, to ensure greater benefits for their communities from the profits of development. That is not unfeasible. I am sure that there is scope for doing that, and I am sure that within the sums that have been allocated under the paving Bill it should be possible to provide expert advisory units to support local authorities to do the job better and to gain more from the section 106 process.
	I also think that there is considerable scope for developing innovative thinking such as that in Milton Keynes, I note that my hon. Friend the Member for Milton Keynes, South-West (Dr. Starkey) is here and I know that she will be more expert in the matter than I. English Partnerships, the local authority and other development interests in Milton Keynes worked for some time to produce the concept that was called, perhaps inappropriately, a roof tax, although it is more a tariff system. The benefit is that it gives certainty to all parties that there will be proceeds from development and that those can be used to fund the necessary infrastructure and social provision.

Phyllis Starkey: Obviously I am a great admirer of the tariff in Milton Keynes, but my right hon. Friend will be aware that Milton Keynes is very particular in having, essentially, a single landowner in English Partnerships and in having, as a growth area, large development that is planned, so that we know where housing will be and can say precisely what infrastructure is needed over time as well as within an area, meaning that it can be costed in advance and a sum agreed per dwelling. That is applicable to other growth areas, but it is difficult to see how it could be generally applicable.

Nick Raynsford: I agree wholeheartedly. I was not recommending that the roof tax be applied generally. As my hon. Friend rightly highlighted, it is an appropriate mechanism for areas with a greater than average concentration of land ownership, with greater than average uniformity of land values and where there is certainty in the development pipeline. It is precisely in such circumstances that that mechanism is one of the most effective tools to achieve the objectives that we all have. It would be wholly inappropriate in Greenwich, but as I have pointed out, I do not think that the planning gain supplement will be appropriate in Greenwich, and I would rather have a framework that allowed section 106 agreements, which have worked well there, to continue, allowing the developments to flow in the area.
	The argument that I have been advancing is that there should be more of a focus on existing mechanisms or new thinking about appropriate mechanisms that may be tailored to the needs of individual areas. We should allow those to succeed rather than focusing on the single, across-the-board mechanism of the planning gain supplement, which in my view will not deliver the promised benefits in certain areas. I have explained why I do not think that it will deliver in many development sites on my own patch. I agree with my hon. Friend, but the conclusion that I draw is that an across-the-board taxation system such as PGS is probably not the right way forward. Instead, we should be looking at how to develop the different mechanisms that exist at the moment or are being developed.
	The last one that I want to refer to briefly is the concept of a strategic section 106 agreement. One of the greatest worries about section 106 is the uncertainty for developers as to what they are likely to be required to pay. I fully understand the worries that they have expressed about that element of uncertainty in the existing system. The idea of a strategic approach is to set out in advance a much clearer indication of the contribution that developers will be expected to make, so that when they go to explore a particular site, they can do so with greater certainty. That would be a good way to tackle one of the difficulties with section 106, and it would do it in a way that ensures that developers and local authorities have a common interest. That common interest would mean that development would happen, that the developer would know what they were expected to contribute, that there would be greater certainty, and that the contribution would be used for local benefit.
	There are a range of options; the planning gain supplement is not the only possibility open to the Government. I hope that my hon. Friend the Minister will recognise that the alternatives merit further consideration. I hope that when the consultation is finally assessed, he will come to the conclusion that we should not take a highly risky route that may not provide all that was promised, and that there is considerable merit in exploring the scope for making existing mechanisms work better, and ensuring that the objective that we all share is achieved. That objective is greater success in capturing the profits of development to ensure more successful, sustainable developments that work well, and for the interests of the whole community.

Vincent Cable: It is a privilege, as it was on Second Reading, to follow the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), who speaks with a great deal of experience and wisdom on the subject, and who has addressed it in a completely non-partisan way. He exposed the arguments very properly, and gave the strongest argument for not proceeding with the paving Bill. Of course, that is partly a matter of public finance, as sums of £50 million are by no means trivial, but the real argument was the one that he advanced. There is a juggernaut principle in Whitehall, and once contracts are signed, once the computer company is involved and once a Whitehall section is set up to promote a measure, it is very difficult to stop the juggernaut. That is why it is important to discuss issues of substance.

Phyllis Starkey: I seem to recall it being mentioned earlier that there was a paving Bill to enable us to join the European currency, yet that juggernaut has not yet driven us inexorably into the European currency. Does his argument not therefore fall away?

Vincent Cable: Well, I am not sure that the juggernaut has entirely ground to a halt, because I still sit on the Chancellor's preparatory committee, but I think that the brakes have indeed been applied. I want to pay a compliment to the Minister, who has dealt with the Bill in a good-humoured, tolerant way. I think that he has taken every intervention that has ever been thrown at him, and as a result we have had a much more substantial discussion that we would have done otherwise.
	I shall briefly summarise the arguments for not proceeding with the Bill, which are of course based on wider arguments about the planning gain supplement principle. The first argument is that the Bill is precipitate, as there is no consensus on it. The hon. Member for Rayleigh (Mr. Francois) summarised the objections of various institutional bodies, and of local government, which is a crucial partner in the proposal. I add that there is need for party-political consensus, too. Certain policies need to span generations; pensions policy is one of them, and policy on the planning gain supplement is another. A lesson has been learned, because different parties have tried to introduce a similar measure, starting with Lloyd George and Winston Churchill in the 1906 Government. Attlee had a go at it; Wilson had a go at it twice; and even Mrs. Thatcher had a try, before abolishing the measure. Everybody has had a go at it, but it has been difficult to implement the measure, partly because of vested interests, party-political opposition and technical problems. It is essential that a much stronger consensus be developed on the idea.
	It is the second objection that was behind the amendments that I tried to move in Committee, and which the right hon. Member for Greenwich and Woolwich dwelled on. It concerns the way in which the measure takes away from local autonomy, which is already limited in respect of planning matters, and weakens the scope for section 106 agreements. The right hon. Gentleman gave some very good examples from south-east London, showing how creative and experienced planners can extract value for their community, in a way that is appropriate to that community. There are many different ways in which communities seek offsets; it can be through local infrastructure, or through wider infrastructure, such as that relating to health and education. Some councils want cash, and others want affordable housing. The balance is different in each case.
	My constituency houses the Mecca of rugby union, and the Rugby Football Union has just expanded one of its major stands. As a result of negotiation through the planning process, a planning gain agreement has been signed that provides for, among other things, improvements to the local town centre, a system of buses to take fans to local railway stations, and part-access to the conference centre for local performance arts bodies. Those are local concerns that local planners and their representatives understand, and an optimum mix has been obtained. In an area planning application, the Rugby Football Union made the concession of supporting a local residents' parking scheme, intended to deal with the problems caused by fans on match days. That local input in the negotiating process will be missing once there is a national tax, which will simply become a revenue source.
	To take another example, I recently visited a rural district where there is intense pressure on affordable housing. It so happens that the local planners are sophisticated and use section 106. In fact, they use it in a very aggressive way, and they have gone beyond the normal de minimis limits. Normally, the Government suggest that affordable housing offset should be asked for once 12 residential units are to be built. The council in question was very aggressive, and said that for every new private residential home, one affordable home should be provided. That is quite a tough policy, but given the context—there was a great deal of development uplift, and a great scarcity of affordable housing—it worked, and the council obtained a lot of affordable houses. It is the council's judgment and its call; it understands the local balance. That is what section 106 agreements allow, and why use of it should be nourished, rather than stifled.
	The right hon. Gentleman was right to acknowledge, as I do, that the system is patchy. I was struck by the comments of the Minister, who made the good point that many councils do not use section 106 at all. Clearly, there are many smaller developments for which use of section 106 may not be appropriate, but the Minister quite correctly asked why some councils do not pursue that route even for large projects. It is a good question, and I am not entirely sure what the answer is. I suspect that, in some cases, there is not very much development uplift. There may not be the same pressures, and in many industrial parts of Britain, the land is contaminated and does not have a great deal of value to developers. It may well be that many councils are just not working with the system properly and have not got used to it. That gives us all the more reason to do a lot more to spread good practice, even if we do not proceed with the scheme. We should develop pilot schemes, whether they involve tariffs or take other forms, to make the existing system work much better.
	I have given two compelling arguments for not taking the Government's route—the first was the lack of consensus, and the second was the draining away of local authority—but there are others, too. The third point is that the scheme is unnecessary. There is, of course, a strong philosophical argument for obtaining planning gain for the community. Clearly, if there is an uplift through planning approval, and if that uplift is considerably in excess of the opportunity cost for the developer—the risk-adjusted return, which obviously has to be considered—there will be a gain to which the community might reasonably want access. However, discussions on that point have largely ignored the fact that there is already a mechanism to ensure such access: as well as the section 106 agreement, there is capital gains tax.
	As a result of the planning gain supplement, many developers will pay under section 106, and then pay up to 40 per cent. capital gains tax, and then pay the planning gain supplement, too. We are not told the planning gain supplement rate, but it is an open secret that it is 30 per cent. Section 106 plus 40 per cent. plus 30 per cent. would be quite a high rate of tax. Of course, the Government say that in practice they would not apply full capital gains tax, but would instead give a tax offset, and that in turn would reduce the revenue. The question of whether the measure is necessary, even in revenue terms, has to be posed.
	Fourthly, there are basic issues of complexity. If the Government proceed with a substantive Bill, we will find out whether they would impose de minimis limits of some kind on small developments. That would greatly reduce the bureaucracy involved, but some things are inherently complex, and that includes big development projects. They often involve pieces of land with different owners, obtained at different times. Calculating the planning uplift for a big development is inherently a difficult and complicated process.
	Planning itself is complicated. I have never heard a proper answer to the case that I cited on Second Reading. The external cladding of a building, for example, may well require planning permission. Does the valuation have to be calculated for tax purposes? There is enormous administrative complexity associated with the planning process that could well make it prohibitive.
	The final point, which has been made by the right hon. Member for Greenwich and Woolwich and others, is that PGS might create disincentives to development. There are, however, cases where the impact may be positive. The right hon. Member for Wokingham (Mr. Redwood) came up with a slightly perverse example, which was nevertheless valid. Some developers may be panicked into developing because they feel the planning gain supplement coming. There will be other cases of developers who have planning permission, have paid the tax and may therefore be discouraged from keeping the land in a land bank. They have already paid the levy, so why not develop it? There may be positive incentive effects, but it is much more likely that developers will be discouraged from making planning applications. Experience suggests that that is overwhelmingly the case.
	Given that there are so many reservations about the fundamental principle, which are widely shared by practitioners in local government and across the House, it seems extremely unwise and unnecessary to proceed with the paving Bill.

Phyllis Starkey: As the House knows, the Communities and Local Government Committee carried out an investigation on the planning gain supplement. I remind Members that it is an all-party Committee, and the view of the Committee was that there were some potential benefits to the planning gain supplement, but that whether those benefits were realised would depend on the detail of the PGS.
	Evidence was given to the Select Committee by a wide variety of organisations, many of which had also responded directly to the Treasury's own consultation, on what they perceived to be the likely effects of the tax. Obviously, because that consultation was carried out without any of the details of the tax having been decided on or made clear, in their responses to the consultations many organisations looked at the worst possible case, so they were responding not to a PGS that might be levied at, for example, 20 per cent. or 30 per cent., but to the possibility that it might be levied at 110 per cent., like one of its predecessors. Not surprisingly, at 110 per cent. it was a disaster.
	One of the Opposition Members pooh-poohed the argument about the rate. Income tax levied at 30 per cent. or 40 per cent. is reasonable. Income tax levied at 99 per cent. clearly would be unreasonable. The rate is therefore relevant to whether a tax is reasonable and operable. It is perfectly reasonable to point out that in all the predecessors to the planning gain supplement, the rate has varied from 52 per cent. to 110 per cent. As I said, at that rather extortionate level, it is not surprising that the tax did not work, but it cannot be logically argued from that that a more reasonable tax would not work.
	There are merits to the PGS, but the issue is the detail. I welcome the fact that the Treasury responded to the Select Committee report by not rushing straight from the first consultation into firm proposals, but has launched three other consultations on further technical detail. Personally, I think it might be necessary to hold a further consultation once the Treasury has decided on some of the details of PGS. It is an extremely complicated tax, were it to be introduced, and it is important that the Treasury get the detail right and that external stakeholders be given the opportunity to respond at every stage in the process of implementation of the tax. The more some details are firmed up, the clearer and easier it will be for those organisations to respond on the remaining detail.
	It is important that we constantly restate the context in which the tax is proposed, which is the failure to build enough houses to meet household growth, particularly but not exclusively in the south-east and in London. Those of us who represent areas in the south-east and in London know well the consequences of that shortage of housing at all levels, including affordable houses, for the lives of our constituents, particularly for the younger generation.
	That shortage of housing has the potential to set up an unhelpful intergenerational conflict between those of us who are fortunate enough to have bought houses—for example, my first house cost less than £5,000, which is an unimaginably small sum for a three-bedroom house—and those of the same generation as my own children who, even though their earnings in real terms are comparable to what my husband and I earned at the time that we bought our first house, are nowhere near being able to afford a comparable house. That is a generality across the south-east and London. Those of us who have been fortunate need to understand the consequences if younger people coming up cannot afford to buy their own house, even if both partners are in reasonably well paid employment.
	It is important that we consider ways of funding the infrastructure, because everybody, developers included, is clear that it is not enough to build housing; the infrastructure must be provided in a timely way to support that housing. Clearly, therefore, the infrastructure needs to be funded. The Committee was not wholly convinced that better use could not be made of section 106 powers. Many local authorities use section 106 very effectively, but there are unfortunately many others that do not.
	The Milton Keynes infrastructure tariff is a particularly imaginative use of section 106 powers, aided by the fact that the Treasury, through English Partnerships, is forward-funding it, which is a crucial part of making it a success. However, as I explained in an earlier intervention, I do not think the infrastructure tariff is generally applicable, though it is being taken up by a couple of other local authorities already—Ashford and Reigate and Banstead—so it is applicable in some cases.
	Section 106 has not delivered well across the piece. I cite again the example of Kent county council, an authority which, in its evidence to us in one of our other inquiries, made great play of the undeveloped land in Kent that had planning permission but was not being developed. When the witnesses were pressed, it became clear that the land was not being developed because of a lack of funding for the infrastructure that would unlock those sites. Given that Kent county council presumably wishes those sites to be developed, as it has granted planning permission and as Kent has a dire shortage of housing, and given that Kent county council is, on the whole, a fairly well run authority, if it were able to use existing section 106 powers to unlock the funding for the infrastructure that would unlock those sites, I assume it would do so. That in itself demonstrates that there are problems with relying on section 106 if we are to fund the infrastructure properly to provide for the housing that is needed.
	The Committee asked the Treasury to carry out a cost-benefit analysis of PGS with a scaled-down section 106, as compared with the effective use of section 106, and I hope the Treasury will still do that. That needs to be backed up by a realistic assessment of how effectively good practice on section 106 can be spread across the whole country and a recognition that local authorities of all three political parties are clearly not effectively using section 106 powers at present. We need to consider why they are not doing so, rather than believing that by waving a magic wand we could ensure that all those authorities used section 106 properly in the future.
	In the lead-up to the introduction of PGS, I hope, in special pleading as a Milton Keynes MP, that the Treasury will consider transitional arrangements—

It being one hour after the commencement of proceedings, Mr Deputy Speaker  put forthwith the Question already proposed from the Chair, pursuant to Order [this day].
	 The House divided: Ayes 275, Noes 198.

Question accordingly agreed to.

Income Tax Bill

As amended in the Joint Committee; considered.
	 Motion made, and Question put forthwith, pursuant to Standing Order No.60 (Tax law rewrite bills), That the Committee of the whole House be discharged from considering the Bill.— [Liz Blackman.]
	 Question agreed to.
	 Order for Third Reading read.

John Healey: I beg to move, That the Bill be now read the Third time.
	I am pleased to open this Third Reading debate on the Income Tax Bill, which rewrites the core provisions of our current income tax legislation. The Bill has been produced by Her Majesty's Revenue and Customs tax law rewrite project, which is working to rewrite our direct tax legislation so that it is clearer and easier to use. It is the third rewrite Bill to venture into the complex and extensive territory of income tax. Once enacted— [Interruption.]

Mr. Deputy Speaker: Order. I am sorry to interrupt the hon. Gentleman, but may I ask Members who are not staying for the debate please to leave the Chamber?

John Healey: I was encouraged a moment ago, Mr. Deputy Speaker, by the attendance in the Chamber for this important debate.
	Once enacted, the Bill will complete the project's work on income tax. In particular, it deals with the basic provisions covering the charge to income tax, including income tax rates, various reliefs and the calculation of income tax liability.
	I am grateful to Opposition Members for the constructive way in which they have approached the proper scrutiny of the Bill, as they have with all previous tax law rewrite Bills. The cross-party support for the project and the distinguished and expert input that we get from within and outside Parliament are important features of the tax law rewrite project.
	The project was set up in 1996 by the right hon. and learned Member for Rushcliffe (Mr. Clarke), and I am pleased to say that it has continued to have not only the support of his party in opposition but his personal commitment. I wish to place on record my appreciation of the way in which he chaired the proceedings of the Joint Committee on Tax Law Rewrite Bills last month. I also record my appreciation for the work of Lord Newton of Braintree in chairing the project's steering committee.
	The aim of the project is to rewrite the UK's direct tax code, the provisions of which have been enacted over more than two centuries. The principal aim of the rewritten legislation is that it should be accepted by all the main users as clearer, as easier to use, and as preserving the effect of the present law, apart from minor agreed changes. To that end, the project proceeds through careful consultation and consensus, overseen by its two external committees: the steering committee and the consultative committee.
	In between the three income tax Bills that have been enacted, the project has also rewritten pay-as-you-earn regulations in direct response to requests from users and representative bodies. Those Acts and regulations have been warmly welcomed by tax professionals and by other users.
	The Bill follows the same tradition. The Institute of Chartered Accountants in England and Wales commented on it in a way that can be taken as representative of wider views of users of the measure. It stated:
	"We commend the Tax Law Rewrite team on having produced another excellent rewrite Bill."

Lembit �pik: While the Financial Secretary is speaking generally, I want to highlight the fact that, although the changes might be welcome, one of the problems in implementing them is the possible closure of regional tax offices such as those in Welshpool, Ceredigion and other outlying areas. Does he accept that there is a contradiction between passing potentially beneficial changes to the tax regulations and removing the direct contact through local tax offices that would ensure their smooth application?

John Healey: I am sorry to say that rewriting tax legislation has nothing to do with the hon. Gentleman's point.
	Making any change to the main tax policies is clearly beyond the remit of the rewrite project, but it can encompass minor changes when they improve legislation. Examples include new provisions to: clarify points in existing legislation, repeal obsolete material, and correct minor, unintended anomalies. The explanatory notes on the Bill and the notes on the new clauses, which were added at the Joint Committee stage, list 162 such minor changes. However, major changes will always be matters for a Finance Bill.
	The Joint Committee noted the widespread public scrutiny of the Bill as a whole, especially of the minor changes, which were clearly flagged up at each stage of the consultation process. The Committee satisfied itself, and reported to the House, that all the proposed changes were within the project's remit. The House also heard that they all had the support of the project's external steering committee.
	The Joint Committee carefully considered the amendments to incorporate a new part into the Bill to rewrite the legislation about the accrued income scheme. The amendments were agreed. In reaching that view, the Committee heard that consultation had taken place on the rewritten provisions as part of the previous rewrite Bill and that the external steering committee supported the inclusion of the new material.
	The Joint Committee paid particular attention to clause 1029clause 962 in the original Billwhich confers a new power on the Treasury to undo changes in the law made by the Bill and restore the law to what it was previously. That is similar to the power to make consequential amendments, which is included in the measure and previous tax law rewrite Bills, and allows amendments to be made to correct the Bill without having to use primary legislation. The new provision will enable inadvertent changes that the Bill makes to the law to be corrected without the need for recourse to a Finance Bill.
	I am happy to confirm to the House, as I did to the Joint Committee, that it is our intention and undertaking to introduce orders under the new power only with the agreement of the tax law rewrite project's steering committee. The benefit of including the power in the Bill may soon become evidentperhaps sooner than we had anticipated given that two minor errors of the sort that I described have already been identified. Both affect paragraph 38 of schedule 2. Subject to the views of the tax law rewrite committees, it is the Government's intention to correct them with effect from the date on which the Bill is enacted.
	I have explained that the Bill tackles the core provisions of income tax and the rewritten legislation for the basic provisions for the charge to income tax, income tax rates, the calculation of income tax liability and personal reliefs. It also includes rewritten legislation for specific reliefs, including loss relief, the enterprise investment scheme, venture capital trusts, community investment tax relief, relief for interest paid, gift aid and gifts of assets to charities.
	The measure additionally contains specific rules about settlements and trustees, the deduction of tax at source, manufactured payments and repos, the accrued income scheme, tax avoidance and general income tax definitions.
	I stress the management of the project and the consultation to underline the amount of expertise, scrutiny and, indeed, the extent of consensus about the Bill on Third Reading. It is right to pay tribute not only to those directly involved but to the users who play such an important part in ensuring that the tax law rewrite project lives up to its original aims. All those involved in the consultation process have made and will, I hope, continue to make an invaluable contribution to its success. The Paymaster General and I greatly value their commitment and contribution to the work.
	To sum up, the project is worth while, modernises our direct tax legislation and makes it clearer and easier to use. The third Income Tax Bill completes the rewrite project's work on income tax. It is a major milestone and I commend it to the House.

Mark Francois: Having dealt earlier today with the arguments surrounding the Planning-gain Supplement (Preparations) Bill on behalf of Her Majesty's Opposition, I am pleasedas, I suspect, is the Financial Secretaryto move on to the less controversial topic of the Income Tax Bill, which is the latest in the series of rewrite Bills undertaken under the auspices of the tax law rewrite project.
	As hon. Members know, the House deals with such legislation through a special procedure under Standing Order No. 60. It means that, once the Bill is drafted and introduced, it is referred to a Second Reading Committee, which met on 17 January to take an initial look at the measure and referred it for more detailed consideration to a specially convened Joint Committee of both Houses.
	The Joint Committee met on 24 January under the experienced chairmanship of my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke), a distinguished former Chancellor of the Exchequer. I am pleased to see him in his place. The Committee took evidence from experts, including the Financial Secretary, and key officials from the tax law rewrite team, led by its director, Mr. Mark Nellthorp.
	The Joint Committee subsequently produced a report, HC 268, which I have here, and was published just before the half-term recess. Hon. Members have had an opportunity to examine it during the break.
	Before we complete our consideration of the substantial measure, I have several comments to make about the Bill, the Joint Committee's examination of it and its subsequent report.
	The Bill centres on rewriting the tax code for income tax. Its main purpose, as set out in the explanatory notes, is
	to rewrite the income tax legislation that has not so far been rewritten to make it clearer and easier to use.
	The Bill is massive in size. It comprises three volumes, with a total of 1,035 clauses and four large and detailed schedules. Given the mass of detail in the measure, it is important to stress that it has been through a considerable gestation period, including detailed consultation with interested parties, before appearing before the House this evening.
	During the proceedings of the Second Reading Committee, which were held Upstairs on 17 January, I went into some detail about the consultation process that took place before the Bill was published. I do not, therefore, intend to reprise that now. Suffice it to say that the measure is the product of extensive consultation with tax professionals for two years or more. It was drafted by a specially configured project team comprising officials from Her Majesty's Revenue and Customs, parliamentary counsel and public and private sector tax professionals, whose work was overseen by the steering committee, which was originally chaired by Lord Howe of Aberavon and more recently by Lord Newton of Braintree. Considerable effort goes into rewrite Bills before they are even published, and that was certainly the case in this instance.
	The spirit of the process is intended to be bipartisan, and to clarify the law rather than introducing measures that are potentially controversial and might more properly be reserved for a Finance Bill. The Financial Secretary was keen to reiterate that this evening. However, I want to return to two issues that I raised in the Second Reading Committee, which were pursued by the Joint Committee when it met the following week, as well as commenting on the special powers in what is now clause 1029.
	The first of those issues concerns the draft clauses relating to the accrued income scheme, which clarify the details relating to the taxation of interest on the sale of interest-bearing shares. The clauses were presented to the Second Reading Committee as a set of 66 separate additional draft clauses, which the Government sought permission to add comparatively late in the day. As I observed at the time, the Chartered Institute of Taxation said of the late change:
	We note that to make extensive amendments to a rewrite Bill at such a late stage is unprecedented, and the reduced consultation period (over the Christmas break) has meant that line-by-line analysis of the clauses has not been possible on this occasion.
	However, as the Financial Secretary explained to the Second Reading Committee, the clauses had originally been intended for an earlier rewrite Bill, but had been removed at that stage. It was decided to insert them in this Bill, as it would be the last scheduled to deal specifically with income tax. The Financial Secretary told the Committee:
	The provisions did not come completely out of the blue from the tax law rewrite project; they had previously been proposed but were dropped during the later stages of the last rewrite Bill... Given that this is the last income tax Bill being handled by the tax law rewrite project, it seemed appropriate, given that the provisions are totally within the terms of the project, to include them in this rewrite Bill rather than deal with the matter in the Finance Bill.  [Official Report, Income Tax Second Reading Committee, 17 January 2007; c. 14.]
	Owing to the slightly unusual nature of what happened, the Joint Committee nevertheless examined the issue of the late changes to the Bill and reached the following conclusion, which should give the House some comfort:
	The Committee accepts the Government's proposed new part: Accrued income profits. While substantive new clauses such as those forming the new part would normally be included in the Bill prior to its introduction, we recognise that there were exceptional circumstances in this case. We consider that these clauses have been subject to extensive consultation and should be included as part of the Bill.
	We are grateful for that reassurance, and given that the Joint Committee has scrutinised the matter, we are content to allow the changes to be made.
	The second issue that I want to raise relates to the definition of associated operation for the purpose of the transfer of assets in certain circumstances, which is contained in what is now clause 719. The proposed clause replaces the definition in section 742(1) of the Income and Corporation Taxes Act 1988, which the tax law rewrite project had already described as ambiguous.
	I raised the issue in the Second Reading Committee following representations from the president and other members of the City of Westminster and Holborn Law Society. What concerned them was that the new definition, although undoubtedly clearer than the original, had changed the law by making the definition of associated operation far wider, rendering it beyond the scope of what would normally be expected in a tax law rewrite Bill and to the advantage of Her Majesty's Revenue and Customs rather than the ordinary taxpayer. I was pleased to note that the Joint Committee paid some attention to that point.
	The exchanges on the issue are on pages Ev 4 and 5 of the minutes of evidence that accompany the Joint Committee report. Some reassurance was given by Lord Newton of Braintree and Lady Cohen, and subsequently by the assistant director of the rewrite project, Mr. Brian Jones. Mr. Jones explained that the representations from the City of Westminster and Holborn Law Society had been re-examined by the consultative and the steering committees before the change was endorsed. In his testimony to the Joint Committee, he said:
	When the letter from the City of Westminster and Holborn Law Society arrived, we decided to put that again to the committees and there was a full discussion at the committees when the background was examined and both committees agreed that this was, first, within the remit of the project and, in addition to that, it was a change which should be made because it makes the law clearer.
	As a result, the Joint Committee was happy to let the change proceed. We are grateful for that additional reassurance, as no doubt will be the president and members of the City of Westminster and Holborn Law Society.
	I want to say something about the proposed operation of what is now clause 1029, which for much of the process was clause 962. It is unusual, in that it grants Ministers power, by order, to amend the Bill up to 5 April 2010 to restore the law to its previous position following the discovery of any inadvertent change in the law that it might make. In his evidence to the Joint Committee, the Financial Secretary described the power as novel. I congratulate him on his perspicacity in ensuring that it can be used to deal with two small lacunae in the Bill. We cannot accuse him of being slow off the mark in implementing the new power with which the House seems ready to provide him.
	The Financial Secretary explained the proposed operation of the clause to the Joint Committee. Given that the position is unusual, I think it worth putting what he said on the record:
	Technically... it would be possible to lay the Treasury order without consulting and without clearing it with the Consultative Committee or the Steering Committee of the Tax Law Rewrite Project. In the explanatory memorandum, we have given an indication and a commitment that we would do so, discuss and agree with both committees before laying such an order, if we deemed it appropriate. I, as Minister responsible, would like to underline that commitment on the record for the Committee today.
	The Minister reiterated the commitment this evening, and we are grateful for that.
	The Joint Committee obviously appreciated the Minister's reassurance on what is now clause 1029. In its subsequent report, it commented:
	We accept that the power given in Clause 962
	as it was then
	will not be used to substantively change the law outside of the Tax Law Rewrite Project. We note with approval the Minister's assurance that the power could not be exercised without both reference to the Consultative Committee and the agreement of the Steering Committee.

Kenneth Clarke: rose

Mark Francois: I should be delighted to give way to my right hon. and learned Friend.

Kenneth Clarke: Our Committee paid particular attention to the question of whether tucked away in this huge Bill was a power enabling the Treasury to make substantial changes to tax law without reference to the House. I am sure that the Minister did not intend that, but it is best not to tuck such powers away in lengthy legislation. In fact the power is extremely limited, and the Minister has given us very adequate assurances by which I am sure any subsequent Minister in any Administration will abide. Moreover, it exists only for the purpose of returning the law to its original state; it is not some tremendous blanket power to sweep the House aside. I think the Committee was generally assured that there was no danger lurking in the provision, and I am glad that my hon. Friend seems to have reached the same conclusion.

Mark Francois: My understanding of the Joint Committee's role was that it should examine any particularly interesting aspects of the Bill in detail, and that is exactly what it has done. It has provided, in a sense, a constitutional safeguard. As the Committee seems to have been satisfied and the Minister has given a firm commitment, we are satisfied as well. The matter has been scrutinised, and I think that we can leave it there. I note, however, that there is already an intention to use the power.
	I want to say a little about the tax law rewrite project and its interaction with the rest of the United Kingdom tax code. This is the fourth in a series of tax law rewrite Bills, and in the Second Reading Committee the Financial Secretary confirmed that it would shortly be followed by a further rewrite Bill dealing with corporation tax. The consultation exercise on this new Bill has only just been initiated. We have speeded up the process of rewrite Bills to a pace of about one a year from about one every two years. Unfortunately, it seems as though some rewriting and clarification of our tax code may be necessarylargely thanks, it has to be said, to the Chancellor of the Exchequer rather than to the tax law rewrite project.
	Tolley's tax guide, which I have here with me and which is usually referred to as the accountant's bible, has almost doubled in length since Gordon Brown, a man who loves complexity, became the Chancellor of the Exchequer back in 1997

Mr. Deputy Speaker: Order. The hon. Gentleman needs to recognise that he should not refer to hon. Members by name, but by their position or constituency.

Mark Francois: You are entirely right, Mr. Deputy Speaker.
	The current Chancellor of the Exchequer, who took up his post in 1997, has had some responsibility for expanding the length of the UK's tax code. In 1997, Tolley's was 4,555 pages long, whereas today it now stretches to 9,841 pages. That was picked up by the  Financial Times in September 2006, when it specifically pointed out that the tax code had doubled in length under the Chancellor's stewardship. In an article entitled, Guide to tax code doubles in length under Brown, Vanessa Houlder commented

John Healey: Does not the hon. Gentleman accept that quality and clarity are more important in tax legislation than brevity? That underlies the purpose of the tax law rewrite project, and its production has been welcomed by professionals in the field.

Mark Francois: I would accept that in principle and I have already complimented the work of the tax law rewrite project. I am simply commenting on the fact that our tax code appears to be getting longer and longer. As I shall briefly explain, that is not down primarily to the rewrite project, but to the Chancellor of the Exchequer.
	The  Financial Times said:
	The burgeoning of Tolley's commentary on the code reflects the growth of tax legislation and the increasing complexity of the system according to LexisNexis, the publisher. It said this year's budget alone was responsible for adding more than 600 pages of the guide, which is now almost 10,000 pages long.
	Moreover,  The Economist pointed out prior to Christmas that the problem of the length of our tax code, of which today's Bill will eventually become a part, is becoming worse. Citing recent research by PricewaterhouseCoopers and the World Bank into the comparative length of tax codes around the globe,  The Economist highlighted the fact that Britain now has virtually the longest tax code in the developed world, coming second only to India.

John Healey: The hon. Gentleman may go on to make this point, but if he does not, does he recognise that the PricewaterhouseCoopers report referred only to primary legislation? It does not refer at all to state or local taxes, which are a significant feature of the tax code in many other countries, but not, of course, in the United Kingdom.

Mark Francois: The Minister pre-empts me, as I was just about to provide the definition that was used in the PWC-World Bank study. I thank the Minister for his alacrity, but if he will bear with me for just a moment, I will define exactly what it refers to.
	Of the major countries examined in the PWC-World Bank study, the comparative length of their respective tax codes, defined as the number of pages of primary tax legislation, was as follows: India, 9,000 pages; the United Kingdom, 8,300; Japan, 7,200; Germany, only 1,700; France, 1,300; and Switzerland only 300 pages of primary tax legislation. That shows a major disparity in the length and complexity of tax legislation across a number of major economies, with the UK now coming almost top of the league.
	The study was based on the compliance burden of a company actually manufacturing flower pots in the different countries in question. That led  The Economist to publish an article on the complexity of UK tax legislation in its 11 November 2006 edition entitled, Bill and Ben and Gordon, Business Taxation, which argued:
	Of the world's 20 biggest economies, Britain is second only to India in the number of pages taken up by its primary legislation. Each episode of the flowerpot men, a children's television show, used to end with the question: 'Was it Bill or was it Ben?' Where Britain's rising tax burden is concerned many businessmen know the answer: it was Gordon.
	At that point, I gladly give way.

Stephen Hesford: I do not know about the hon. Gentleman's attempted joke, and I am not sure what point he is making. He listed France and Germany, but does he accept that their tax burden is higher overall than the tax burden in the UK, so the example bears no relation to the point that he is makingif, indeed, there is any practical point to what he is saying?

Mark Francois: As I understand it, when it comes to the tax burden we are actually in the process of overtaking Germany, so I am not quite sure that the hon. Gentleman's point is entirely correct [Interruption.] Well, he asked me about both countries, so he should have been more careful in the question that he asked.
	Our tax code is being added to all the time. The PWC study was completed prior to the Finance Act 2006, which itself comprised 181 clauses and 25 schedules of additional tax legislation. On top of that will now be added the 1,035 clauses of the Income Tax Bill that the House is considering tonightand on top of that will shortly come the Finance Bill 2007, to turn the Chancellor's next and probably final Budget into law. Even if that Bill is only the same size as the Finance Bill 2006, the combined effect of all of this legislation will almost certainly be to present the UK with the longest tax code of primary tax legislation in the entire world.
	While the rewrite Bills help to clarify tax law, which itself is a welcome thing, when combined with the Chancellor's innate love of complexity and long Finance Billssomething for which he has become renownedit means the production of an ever-expanding tax code. It is the Chancellor of the Exchequer who is the main culprit here and we have to be careful that we do not discourage enterprise further by his love of devising ever-greater complexity and anti-avoidance legislation.

John Healey: rose

Mark Francois: The Financial Secretary is always courteous in giving way to me, so I shall be courteous in giving way again to him.

John Healey: I am grateful to the hon. Gentleman, whose research team has obviously done its work. Does he accept that it is less the length and more the way in which a tax code operates that is important? Is he aware of the World Bank report last autumn, which identified the UK as first rank in Europe and sixth worldwide in terms of ease of doing business? When it came to ease of paying taxes, the UK was second in Europe only to Ireland and 12th worldwide.

Mark Francois: I shall pass the Minister's compliments, which are gratefully received, to my researcher. As he asks me, I would say that it is a constant feature of Finance Bills that we are dealing with ever-greater complexity. One of the reasons for that is that the Chancellor is a great fan of anti-avoidance legislation. Because it attempts to provide for all sorts of different contingencies, it tends to be very detailed. The Government would argue that they are protecting the revenue, but the way in which they have proceeded in recent years has certainly made the tax code more complicated.
	In summary, we welcome the Bill and its contribution to trying to clarify our complicated tax code. We accept that the measure has been the subject of extensive consultation with experts, both before it was drafted and since, and that it has subsequently been looked at afresh by both a Second Reading Committee of MPs and a Joint Committee of MPs and Peers with specialist knowledge in this areaand certainly with a very specialist Chairman. We therefore believe that, despite its massive size of more than 1,000 clauses, the Bill has still received detailed scrutiny in the course of that two-year process.
	Specifically, we are pleased that the Joint Committee looked in more detail at issues such as the accrued income scheme, the new definition of associated operation and the practical operation of the novel powers now contained in clause 1,029 and are about to get a run-out. We note that the Joint Committee has subsequently provided some reassurance on each of those points in its report. Having looked into the Bill, the Joint Committee report concluded:
	The Committee is of the opinion that the Bill is a welcome clarification of the existing law and will be easier to use and more accessible to Parliament, the judiciary, informed professionals, business people and other users of the legislation.
	Our only proviso, if it can be called that, is the length of the tax code in which the Bill will now be incorporated. Given the 1,035 additional clauses of this Bill and then the additional clauses of the Finance Bills of 2006 and 2007, it seems to us that the United Kingdom will almost certainly have the longest tax code in the entire developed worldif, indeed, we do not already have it. Britain under this Chancellor will finally be a world-beater, but perhaps not in the way that the Chancellor would have wished. When the Minister responds to the debate, will he answer the question that he so artfully ducked in the Second Reading Committee? I am sure that he will welcome the entire rewrite project as I do, but will he now confirm whether, in terms of primary legislation, we have the longest tax code in the world?

Julia Goldsworthy: I was going to start by saying that we would not break the consensus on the Bill, but the hon. Member for Rayleigh (Mr. Francois) came dangerously close to doing so. We broadly welcome this rewrite, because it is important to present our legislation in language that is simpler and easier to understand. That is the aim of the Bill, rather than to simplify the existing legislation, although there is an argument to be had about whether that needs to be done too. The Bill is about producing tax legislation in a language that is easier to understand. Anything that makes a long complicated tax code easier to understand is most welcome. We also welcome the extensive consultation process that preceded the drafting of the Bill, as well as the consideration that it was given by the steering committee and the Joint Committee.
	I do not want to detain the House for too long, but I want to raise one or two issues that were highlighted in the Joint Committee report. The first relates to the concerns expressed on Second Reading about the way in which additional clauses had been added to the Bill after its publication. This point has also been raised by other hon. Members. The Committee noted that in normal circumstances such substantive clauses should be introduced at the outset, but that in this case they could be added to the Bill because they had been the subject of extensive consultation, and had already been considered for a previous rewrite Bill. We stand by those recommendations. We shall also stand by the further amendments tabled by the Government, which were mainly technical and consequential to the proposed new clauses.
	I also want to comment on clause 1029formerly clause 962which grants the Treasury the power by order to amend the Bill until 5 April 2010, in order to restore the law to its previous position in the case of any inadvertent change to the law having been made by the Bill. I welcome the Minister's clarification, in giving evidence to the Committee and when speaking to the House today, that that power would be exercised only after reference to the consultative committee and with the agreement of the steering committee. I smile somewhat ironically as I note that there are already two instances in which that power might need to be exercised.
	I have a couple of questions for the Minister on this point. What would happen if changes were put forward which the consultative committee or the steering committee did not agree were only minor changes? What would happen in the reverse of the example that the Minister gave earlier, when he said that if there was an unintended change in the sense of the legislation, the law could be changed back to what it was before? What would happen if there were an omission to which the provisions needed to be extended? I mention this because we recently debated a statutory instrument on civil partnerships that dealt with changes to income tax, in which definitions had not been applied in every case. How would the clause apply to such a situation? Would the problem have to be dealt with through a statutory instrument, or would clause 1029 be able to deal with it? I would appreciate the Minister's clarification of those matters.

John Healey: I might be able to help the hon. Lady on both those counts. First, clause 1029 would be used only if we had consulted and received the agreement of the two external committees. If they did not agree, we would not use it. Secondly, it can be used only to revert to the original state of the law amendments made by a tax law rewrite Bill, as the right hon. and learned Member for Rushcliffe (Mr. Clarke) made clear. The circumstances to which the hon. Lady is referring would not therefore be covered by the provisions of the clause.

Julia Goldsworthy: My concerns are allayed. I understand that such issues would be dealt with in a Finance Bill or by other instruments; I think that the Minister is nodding his head.
	My hon. Friend the Member for Twickenham (Dr. Cable) spoke for many in the Second Reading Committee when he said that this tax law rewrite project continues to be a labour of love. We should not lose sight of the intended aim of that labour of love, which is to simplify and codify tax law, not to create more. We should therefore ask whether that has been achieved through this process. It was pointed out by my hon. Friend in that Committee, and by the Chartered Institute of Taxation, that rewriting the legislation is worth doing only if it enables the users of the law to understand the relevant points more quickly or more easily. The institute has said:
	It is doubtful whether this has been achieved. Not only does much of the old legislation still remain in force...but the quality of drafting is questionable, being long winded and often imprecise.
	That raises the issue of whether existing practitioners will have to consult not only the new but the old legislation in order to understand the position. I realise that for new practitioners the process will be much simpler.
	I understand from the Second Reading Committee that although 49 obsolete provisions will be removed from tax legislation as a result of the Bill, a further 159 provisions will be added. There will be a real benefit in providing a clear and simple quantification of the impact that this tax rewrite Bill will have on Tolley's tax guide. Such a quantification would give a tangible sense of what the rewrite had achieved, not only for the practitioners to whom the Joint Committee report referred, but for the wider public. There is a real issue about making the language easier to understand, but the separate issue of simplifying the taxation process also needs to be taken into consideration.

Kenneth Clarke: I welcome the Bill, and congratulate the Minister on the way in which he has handled the production of this enormous piece of legislation. He and my hon. Friend the Member for Rayleigh (Mr. Francois) have already described the process through which the Joint Committee went, and I can confirm that their description of the Committee's deliberations entirely accords with my recollection. The Joint Committee paid attention to all the points that we should have considered, including whether the consultation had been adequate, and whether any substantive changes were being slipped through that might alter the incidence of taxation in any significant way. We paid particular attention to the points raised on Second Reading, and all those matters have been covered. The process was comprehensive.
	This debate gives me the opportunity to thank the members of the rewrite committee. After a little over 10 years, we have reached a significant landmark. Rewriting in plain English the entire law on income tax in this country has been a labour of Hercules. The leaders of the team gave evidence to the Joint Committee and impressed us with their clarity and almost instant recall of the most minute details of parts of the provision. The whole thing has obviously been embarked upon extremely conscientiously and very professionally by those people from the Inland Revenue and the office of the parliamentary draftsman. I congratulate all involved.
	The whole process started as a result of some of the debates about my 1996 Budget. I was sensitive to the criticisms that came from the Labour Benches about the growing length of my Finance Bills. My hon. Friend the Member for Rayleigh has already pointed out that my successor, the present Chancellor, produces Finance Bills that are about twice the length of mine, which are having a substantial impact on the tax code. I was also sensitive to the growing criticisms from practitioners that I was producing legislation that was getting longer. Indeed, the experts themselvesincluding members of the judiciary who found themselves hearing tax cases, and practitioners who were meant to be giving advice to their clientswere finding it increasingly difficult to understand the drafting of the legislation that was being applied. That led to a process of rewriting it in plain English. As my hon. Friend said, it is my successor and a succession of Labour Ministersthe Financial Secretary to the Treasury is following the Paymaster General, who implemented many of these provisionswho have carried the process through. I have merely chaired the Joint Committee for some years, and marvelled at the progress that we have made.
	I want briefly to reinforce the comments made by my hon. Friend the Member for Rayleigh. We are rewriting into plain English tax law that is becoming ever more complex. Our tax law may still have some advantages compared with the law overseas, but we are eroding any competitive advantage that might have resulted from having simple tax law in the past. This stems from a policy difference, a difference of approach, and a difference of instinct and philosophy.
	When I was Chancellor, I tried to follow a practice that I thought I had acquired from watching Lord Lawson of Blaby when he was Chancellor of the Exchequer. His principle was that taxation should be as simple as possible, with exemptions and exceptions as limited as possible, and that it should be imposed at the lowest level possible, while still raising the revenue that one needed. I fear that the present Chancellor does not have the same instincts. He is a micro-manager, and he keeps introducing more complexity into the policies of taxation, which the rewrite project must then turn into plainer English. The result is thousands of clauses of ever greater length. The whole House should continue to press the next Chancellorwho will have the unhappy task of being Chancellor for the next Prime Minister, and will probably have a limited scope in some policy areasto be a tax reformer and to return to some simplicity of policy, which would be welcomed in all quarters.
	My other point has already been raised by the hon. Member for Falmouth and Camborne (Julia Goldsworthy). When the project was set up, we talked about rewriting the entire tax code in five years. A little more than 10 years later, we have a long way to go; I think that the next item on the agenda is a rewrite of the entire law on corporation tax. There have been some criticisms as to whether that fantastic effort is justified; I was somewhat concerned that the Institute of Chartered Accountants queried whether we were getting the right return on all the effort being put in. I have reflected on that since the Joint Committee. I think that the answer is yes, but I suspect that, as has been mentioned, part of the problema familiar one to me, as someone who used to practise lawis that those who have practised for a long time and have wrestled to become familiar with the existing law find it slightly irksome that they must start all over again and remember where the law is now in the rewritten Bill, whereas new practitioners, who were recently at law school, find the straightforward language much simpler. That is inevitable when any law is simplified.
	There was a problem with language and drafting, and many distinguished practitioners were beginningunfairly, as it turned outto curse the office of the parliamentary draftsman, which I also did, for producing such impenetrable language. Representatives of the office of parliamentary draftsman have played a leading role, however, in turning that into the nearest that one can get to plain English, given the legal language that a tax code must have to provide certainty and fairness. The whole thing will become impossible if we do not continue the process and continue to clarify what has been enacted.
	At some stageI do not think that it was todaythe Economic Secretary to the Treasury said that the acid test was whether the professional bodies continue to be prepared to devote time and effort and to apply themselves to the consultation process, which is essential if we are to make sure that no serious mistakes are made. As far as I can tell, the members of the professional bodies do appreciate that: plenty of people in the professional world are prepared to give a great deal of what would otherwise be their expensive time to that. Therefore, the labours of Hercules should be continued.
	The process will require the same levels of professionalism and application as we have had from the Ministers whom we have been lucky enough to have handling the matter over the past 10 years; for a long time it was one Minister, and I am sure that she is mightily glad to be rid of it and pass it on to her successor. The process is worthwhile, however, and today marks an extremely significant step. I just hope that we find that only two errors have been made in the hundreds of pages, and that the provision that has rightly been included to achieve minor corrections and return to the old law if anything is wrong does not have to be overused. I shall be very surprised if it does, because I was so impressed by the way in which the whole Bill had been put together.
	 Question put and agreed to.
	 Bill accordingly read the Third time, and passed.

DELEGATED LEGISLATION

Mr. Deputy Speaker: With permission, I shall put together motions 5 to 9.
	 Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Delegated Legislation Committees),

terms and conditions of employment

That the draft European Communities (Employment in the Civil Service) Order 2007, which was laid before this House on 25th January, be approved.

income tax

That the draft Tax and Civil Partnership Regulations 2006, which were laid before this House on 12th December, be approved.

northern ireland

That the draft Northern Ireland Arms Decommissioning Act 1997 (Amnesty Period) Order 2007, which was laid before this House on 11th December, be approved.

housing

That the draft Local Authorities (Contracting Out of Anti-Social Behaviour Order Functions) (England) Order 2007, which was laid before this House on 9th January, be approved.

mental capacity

That the draft Mental Capacity Act 2005 (Loss of Capacity during Research Project) (England) Regulations 2007, which were laid before this House on 15th January, be approved. [Tony Cunningham.]
	 Question agreed to.

PETITIONS

Council Tax Banding

Tony Baldry: I wish to present a petition of the residents of Guardian Court in Banbury.
	The petition states:
	The Petition of the residents of Oxfordshire,
	Declares that the Petitioners are extremely concerned that in some instances Council Tax Bands do not fairly reflect the decreased market value of some properties;
	Further declares that the residents of Guardian Court in Banbury are in Council Tax Bands B and C for properties which the Valuation Office acknowledge are closer to the lower-rate Bands A and B based on almost identical properties near-by in Banbury;
	Further declares that despite what is a record 37 appeals by one road in Oxfordshire to the Council Tax Appeals Tribunal, the Tribunal remains powerless to re-value Council Tax within bands to ensure Guardian Court residents pay a fair Council Tax;
	Further declares that because of the Government's postponement of the Council Tax revaluation because of the Lyons Commission, residents in Guardian Court will continue to pay Council Tax in some instances almost two Bands higher than the market value of their property until at least 2012;
	Further declares that Council Tax payers just want to pay a fair price for their property rather than wait for a revaluation by stealth.
	The Petitioners therefore call on the House of Commons to urge the Government to empower Council Tax Appeals Tribunals to re-value the amount of Council Tax paid within a band where there is a clear case of the property being lower than its market value.
	And the Petitioners remain, etc.
	 To lie upon the Table.

Rail Services

Edward Garnier: I wish to present a petition on behalf of the Harborough Rail Users Group and approximately 4,000 other residents of Harborough.
	The petition states:
	The Petition of Harborough Rail Users Group and others
	Declares that the petitioners support the campaign to safeguard all off-peak rail services to and from Market Harborough from December 2008.
	The Petitioners therefore request that the House of Commons urges the Department for Transport to ensure that the company awarded the new East Midlands franchise maintains these services during the term of the franchise.
	And the Petitioners remain, etc.
	 To lie upon the Table.

BRITISH STEEL INDUSTRY

Motion made, and Question proposed, That this House do now adjourn. [Tony Cunningham.]

Dai Davies: I am grateful for this opportunity to take part in my first Adjournment debate.
	Members may be wondering why I have asked for this debate on the British steel industry, considering that the steelworks in my constituency closed over four years ago, after some 200 years of steel making. The reason is that I was employed in the steel industry for over 26 yearsthe last of four generations of my family to be so employedand I care for those who are still involved in the industry. I believe that the retention of steel making in this country is vital for the economy, and that it is unthinkable that our country could be left without this strategic industry.
	During the 18-month closure period of the steelworks in my constituency, partnership working between Corus management and the senior trade union representatives on site, including me, meant that over 300 individuals were able to transfer to other steel sites in south Wales. Because those individuals commute to work, the wages that they earn come back into the local economysignificant salaries that my constituency can ill afford to lose. There is also a Corus site still located in my constituency that employs around 70 people and pays in excess of the minimum wage, providing quality jobs in an area in which few jobs do pay above the minimum wage.
	In 1976, when I started working for the then British Steel Corporation, there were in excess of 200,000 employees in the industry. Today, that number is down to around 24,000. I accept that a significant number of those job losses were attributable to increased technology, but that is still a massive loss to local economies around the country, especially when we take into account that one job lost in the steel industry has a knock-on effect of four times on relevant jobs in the community such as transport and jobs that are linked to the industry. The effect is devastating for the area and people concerned.
	My concern for the British steel industry is heightened by the recent buy-out of Corus by Tata Steel. Although it is still inconceivable that our country could lose its steel industry or steel-making capacity, I have seen nothing in the press or in news coverage that fills me with any certainty about the future of the industry.
	During the steel closures and 7,000 redundancies in 2001-02, meetings were held with the Prime Minister and the joint trade unions on two occasions to ask him to intervene and to speak to the Corus management, but that was after the closure announcements were made. The Prime Minister made it clear that, because the steel industry was privately owned, there was very little he could do to prevent the closures, although the Government helped by providing retraining packages for the areas affected. However, the quality employment has not been replaced.
	Having received the news of our works closure via the media as a fait accompli, and then been involved in after-the-event saviour negotiations, which were all rejected, I ask the Government to do all they can to ensure that the steel industry has a future in this country. I urge them to have continuous dialogue with Tata Steel in an attempt to gain assurances that it intends to invest in the steel industry in this country and not asset strip.

Ashok Kumar: Is the hon. Gentleman saying that he does not have confidence in Tata Steel, despite all the assurances that it has given? It is investing about 6 billion in buying Corus. If it did not have confidence in the first place, it would not be purchasing the steel industry here.

Dai Davies: I thank the hon. Gentleman for his intervention. When the buy-out was first mooted, there was talk in the press of investment and growth. Since then, the press coverage has worried me. One of the words that was used during the closure time was synergies. At the time, we did not really understand what it meant, which is that if there was a cheaper cost route or like product, there was a chance of closure. That is what happened under the merger with Corus. All I am asking for is that we continue dialogue with Tata Steel to ensure that that promise of investment and support is carried through.
	I have been contacted over the past few months by numerous people who have transferred to other sites. They have expressed concern, and of course the stress and worry are passed on to families. The more we can do to alleviate that, the better it will be.
	I know from my experience as a senior negotiator in the industry that the trade unions have argued for a level playing field within the European steel industry. There is an urgent need for a review of energy prices in this country because there is an imbalance between our production of steel and that in the plants across Europe.

Nia Griffith: Does the hon. Gentleman agree that the dead-end that the full liberalisation of energy policies across the whole of the EU has recently run into offers an ideal opportunity for our Government to reconsider the way in which energy prices are meted out to industry?

Dai Davies: I thank the hon. Lady. That is an extremely important point. In this country, the energy prices are significant in terms of the cost of a tonne of steel. We need to review those and to ensure that we are making our steel industry as competitive as possible. We also need to review business rates. Some work has been done on that in previous years, but we need to look at business rate levels for the industry.

Adrian Bailey: Before the hon. Gentleman moves off Europe, does he agree that one of the things that has put the British steel industry at a competitive disadvantage has been not having a level playing field on the emissions trading scheme? The Government have to be robust with the European Commission to ensure that it does not allow European steel companies to get away with a higher rate of emissions than the British steel industry is allowed. We need a level playing field in that sector in Europe, too.

Dai Davies: I thank the hon. Gentleman. That was my next point. We tend to look at our industry as a dirty industry, and our first reaction is to fine it. I ask the Government to work with the steel industry to help it to become more efficient in terms of carbon emissions. We need to do everything we can to support it, not fine it. As for the level playing field in Europe, there have been problems with other Governments ignoring what has come out of the plants across Europe. That is an important point.
	The steel industry has more to offer than its traditional products. Its apprentice training structure is second to none and one of the few such schemes left. It includes traditional craft training to degree level, team working programmes, business administration, chemical engineering and health and safety, to name just a few. We could go on and on. Those training programmes are among the best in the world.
	One of the drawbacks of college-based training is that, at the end of the course, the individual has little, if any, on-site experience. I ask the Government to discuss with Tata Steel the possibility of establishing a sponsoring system where colleges and other companies external to the steel industry would be able to access the industry's training schemes. The aim would be to establish training partnerships to produce the skilled work force that this country desperately needs.
	I cannot end this Adjournment debate without placing alongside securing the long term future of the steel industry in this country the importance of ensuring the security of the British Steel pension fund, which forms part of the Tata takeover. As the hon. Member for Middlesbrough, South and East Cleveland (Dr. Kumar) said, Tata has made moves to pay into that scheme. That is an important point. As a former trustee of the scheme for some four and a half years I know that it is a very good scheme. It has some 90,000 members across the country. It has helped in no small measure to mitigate the impact of steel redundancies in the past 20 years on communities such as mine. In the present climate of pension uncertainty, I urge the Government to do all they can to protect that scheme.
	I believe that part of the cause of antisocial behaviour in our communities is the loss of manufacturing jobs. Industries such as steel and coal give an identity to the people working in them and to the areas in which they are located. We need to ensure that young people have a role in life, a sense of belonging and a purpose to their existence. The industries were hard, are hard and are dangerous, but communities were built around them. I have always looked at the area I represent as a community of steelit was built around the steel industry and would not exist today without it. That is probably the case across many parts of the country. We can use the influence of those industries to help to get youngsters involved in training and in manufacturing production. I hope that the Government will be able to work on some of those ideas to secure the industry for the future.

Hywel Francis: This is an opportune debate on the future of the British steel industry, which I welcome as a member of the steel union community, a former chair of the all-party group on steel and as the Member of Parliament for the steel constituency of Aberavon. I say that it is opportune for obvious reasons. We are moving into a new period with the imminent takeover by Tata of Corus. In listening to the speech by the hon. Member for Blaenau Gwent (Mr. Davies), I am reminded of the words of the Italian socialist Antonio Gramsci:
	Pessimism of the intellect, optimism of the will.
	While the hon. Gentleman's speech had that sense of pessimism or, I should be generous, realism, I would like to strike a more optimistic noteoptimism of the will. Potentially, we are in a situation where there is a great opportunity. That is certainly the view of management and unions in the Port Talbot steel plant in my constituency. I commend in particular the work of Mr. Phil Dryden of the management of Corus and Mr. David Ferris, the chair of the joint unions, who personify the joint working in the way in which they are building a new future for that plant. That joint-working is known as the journey.
	I should also point to the words of the Secretary of State for Wales, my right hon. Friend the Member for Neath (Mr. Hain). He recognises, as I do, that the takeover has enormous potential, and he emphasises, as I do, that the steel industry has been, and still is, strategically important to both the Welsh economy and the British economy.

Ashok Kumar: My hon. Friend thanks many people for the contribution that they have made to the steel industry in his area. We should also congratulate Philippe Varin on doing a marvellous job in turning around Corus from the situation it was in three or four years ago. It is because of his leadership of Corus that Tata Steel from India is in a position to buy the Corus steel industry. Credit is due to Philippe Varin's leadership, and to the entire board.

Hywel Francis: My hon. Friend anticipates what I am about to say. I acknowledge the contribution of Philippe Varin, and that of the chair of the company, Jim Leng.
	The key is investment. The signs are relatively positivein contrast to some of the comments of the hon. Member for Blaenau Gwent. I welcome the good work done in the run-up to the takeover by the Corus management in securing a good deal for its employees for the immediate future, including resolving the employee pension fund issue and trade union representation and consultation arrangements, andequally importantlyin securing the confirmation of previously agreed capital expenditure projects. That shows that, importantly, there is recognition of the position of the steel industry in Britain. Tata appears to have a strong commitment to the UK steel industry; otherwise, why make those commitments?
	That leads us to believe that the other key factor is the positive role of our Government in the changeover period. The industry is rightly praised for the success in terms of productivity improvements year on year they are much better than for any other part of the British economy. Both the management and the unions should be proud of that, and I am sure that the Government recognise that.
	I was very pleased by the constructive statement made to the Welsh Affairs Committee by the Minister for Trade, my right hon. Friend the Member for Makerfield (Mr. McCartney) on 6 February. During one of the sittings of our major inquiry into globalisation he said:
	The DTI are very keen indeed to work with this new inward investor...we have to ensure that Tata...are looking to expand into markets with the materials and products that are developed by Corus.
	He went on:
	I was pleased to see that Tata have confirmed their commitment in terms of their previous issue of capital investments and I am pleased to see that they have come to a deal with the trustees of the pension fund to sustain and invest in the pension fund. That seems to give me an impression that they are here for the long haul.
	That last phrase is worth emphasising. He ended by saying:
	Tata has given a commitment in terms of the location of the business here in the UK and so we will be looking to work with the company very proactively, and if there are issues that come up where we can assist we will do so.
	That is a welcome commitment on the part of the Government. I take from that ministerial statement that this Labour Government recognise that steel is of strategic importance to the British economy and that they are prepared to enhance that. I look forward to hearing the Minister's response to that point.
	Finally, may I be a little parochial? Will the Minister urge the Government to encourage discussions with Tata to ensure that there is long-term steel investment in Port Talbot in my constituency, and also in all other plants right across the United Kingdom? My plant needs a modest investment of 240 million in the finishing end to ensure that the necessary efficiency and the maximum output of 5 million tonnes can be achieved. Incidentally, that 240 million is roughly the same amount as the banking costs of achieving the recent takeover.
	I am sure that the response of the skilled, professional and dedicated steel industry work force throughout the UK will be worthy of that great industry. We are very proud of them, and we believe that the industry has a great future.

Elliot Morley: I congratulate the hon. Member for Blaenau Gwent (Mr. Davies) on obtaining the debate. He made good points reflecting some of the concerns that steelworkers feel, and he repeated points that they raise with me as MP for Scunthorpe and with Members representing similar areas. I am sure that the hon. Gentleman accepts that, like his own area, Scunthorpe is a community built on steel; few communities have been so dependent on an industry. That is why I, as MP for Scunthorpe, and my hon. Friend the Member for Brigg and Goole (Mr. Cawsey), where many steelworkers also live, are very concerned about the changes. We want there to be a long-term future for our communities and for steelmaking in this country.
	It is a matter of regret that when the steel industry in this country was at its height, the managements of steelworks did not have the strategic vision to reach out to developing countries and to make strategic partnerships. Such partnerships might have been established on a different basis if they had been agreed some years ago. That was a missed opportunity. I know that the Corus management sought a partnership with a Brazilian company. That reflects the fact that there is a strategic argument for this kind of link-up. I do not think that anyone would deny that fact in respect of the Arcelor-Mittal link-up, or that we are in a global economy and we have to compete globally. There is a logic to this kind of development. That is why there were talks with Tata and other companies.
	By coincidence, I was invited by the British Council to speak in Jamshedpur where Tata's headquarters are, at an environmental event. As it happens, that was also part-sponsored by the Association of British Scholars. They are all prominent Indian academics and business people who have been educated in the UK. Many Tata executives fall into that category, including Dr. Mukherjee, who is the managing director of the steelworks in Jamshedpur. He was one of the organisers of the conference. I had an opportunity to meet Dr. Mukherjee, and Mr. Muthuraman, who is the chief executive of the group, and to see their operations in Jamshedpur and to talk to a lot of people involved in it.
	Tata has a good record in India. It has a good social record and is a well managed company with global ambitions. I take on board the point that has been made by hon. Friends that Tata would not have spent all the money that it has spent on buying a steel company in order to close it down. The company bought it because it is seeking a strategic partnership. There is logic in that argument. In fact, my hon. Friends might be interested to learn that the founder of Tatait was founded at the beginning of the centuryinvited Beatrice and Sidney Webb to Jamshedpur to advise the company on its social and economic policies. The Webbs advised Tata to introduce an eight-hour day in 1912, and it introduced that in 1912: a long time before its interest in Corus. I talked about jobs to Mr. Muthuraman, and about investment and the pension. Tata has certainly delivered on the pension, in terms of making up the shortfall and raising the company contributions. That offers great reassurance to many of my constituents, and to people in the whole of the region.
	I felt that Tata was serious about things; it made it clear that it was not buying into Corus to reduce jobs and sack lots of people. Of course, it is a global company, and I have to say that one will not hear many reassurances from Corus's management about the long-term future of jobs. Scunthorpe has been through a lot of very painful restructuring, involving the loss of many thousands of jobs. That happened under the present management.
	I take the point that was made about energy. Deregulation in this country gave us the lowest energy costs in Europe and Corus has of course benefited from that. There have been changes following the rise in energy prices, and I agree with my hon. Friend the Member for Aberavon (Dr. Francis) that there has been a delay in deregulating the European markets. Deregulation is coming, and it will certainly be to the benefit of this country's industry. I also understand the point that was made about carbon. As a former Minister with responsibility for carbon trading, I pressurised Commissioner Dimas to take a tough line on other countries, particularly in the second round of the national allocation plan and the European emissions trading scheme. I am glad to say that he took that tough line, and he has shown real leadership in rejecting plans from a number of other countries, including Germany and France, and saying that they had to make sharper cuts in emissions. Of course, that levels the playing field for us.

Nia Griffith: On the emissions trading scheme and new investment, does my right hon. Friend agree that we need to study the issues in detail in order to provide a proper level playing field for new investment in our steel industry?

Elliot Morley: There are always such issues, and I understand the point that my hon. Friend makes. I must echo the point that was made about Philippe Varin; he has indeed been a very good leader of the company. I recently met Andrew Page, managing director of Corus, to talk about the various issues. Corus's management have led the company into profitability. They were tough negotiators regarding the carbon allocation; indeed, their carbon allocation is quite generous. I appreciate that new entrants constitute a different issue and all I can say is that I am more than ready to work with the unions and the companies to make sure that they get a fair deal and that they are not disadvantaged compared with European rivals. That is very important.
	I agree with the hon. Member for Blaenau Gwent that the test of commitment is investment and it is investment that we want to see. It does nobody any good to talk about massive job losses or the end of steel making in this country; I do not believe that that will happen. My local paper, the  Scunthorpe Telegraph, carried out a survey on this issue, stopping people in the street and asking them what they thought about the Tata takeover. The vast majority of people said, I think that we should give the company a chance. Let them demonstrate what they want to do. We should judge them on their actions. That is not an unreasonable position to take, and I am sure that that is by far the overwhelming view of the unions and of the people of Scunthorpe. One person did tell the paper that there would be thousands of job losses. I did notice, however, that he refused to give his name, so I doubt whether we can take what he said seriously. Nor do such comments help the steel industry in Scunthorpe and the rest of the country.
	Investment is the test. We want investment in our steel works, because we have to compete on the global stage. We now have links to the Asian market, which is to the advantage of steel making in this country. A lot of added-value steel is made in this country that is not made by the Tata group, which is also an advantage. Tata can bring expertise, skills and enthusiasm that can benefit steel making in the UK. Let us judge Tata by what it does. That strategic link can bring benefits, but we do, as I said, want to see investment. Manufacturing is the bedrock of our economy and our productivity, and I agree with the Chancellor that we should move toward a high-tech, high-skill manufacturing economy. I believe that the Tata group shares that vision, and that we in this country have a good steel industry; we certainly have a good steel works in Scunthorpe. I want the industry to succeed and prosper, and I see no reason why the Tata group does not share those objectives.

Ashok Kumar: I congratulate the hon. Member for Blaenau Gwent (Mr. Davies) on securing this debate. I had not realised that because of the time at which the debate started, we would be able to say more than just a few words. I agree with a lot of what my right hon. Friend the Member for Scunthorpe (Mr. Morley) has said. I concur with the fair-minded spirit of his comments about giving Tata a chance to demonstrate what it is capable of. I should also point out that I worked for Corus for 15 years and am one of its shareholders. Shares were given to us when the steel industry was privatised, and I want to put that on the record before someone says that we have not declared that fact, and we have to come before another body to offer an explanation.
	I want to emphasise the opportunity that exists for the steel industry, and to destroy one myth before it takes off. There is no evidence that I am aware of that Tata Steel has in any way been involved in asset stripping. Peddling such a myth would be a wrong and destructive approach, given that some 6 billion is being invested in an effort to save the pension fund and to ensure that we have a steel industry. We are talking about the fifth biggest steel industry in the world, so this is indeed a great opportunity and a great merger, and it should be seen in that light.
	My own Teesside area will benefit greatly from this merger, which will ensure a secure future for some 3,000 direct workers and between 20,000 and 30,000 indirect workers. So it is very important that we welcome the new takeover and those who are trying to ensure that we have a strong steel industry. In doing so, we must praise Philippe Varin. His leadership and that of the main board, under its chairman, Jim Leng, ensured that the steel industry was in a position to be purchased by Tata Steel. A few years ago, the steel industry was heading for bankruptcy. If I remember rightly, the shares, now worth 2.60 or more, fell to 4p; they were certainly heading in a downward direction. So we must praise Philippe Varin for all that he has done.
	As I said, this is a great opportunity. My right hon. Friend the Member for Scunthorpe mentioned the members of Tata Steel's board, and he was right to do so. Some of them were undergraduates and postgraduates studying metallurgy and chemical engineering at Sheffield university. People I know who have talked to them tell me that they have great affection for this country. They have benefited from being educated here, which demonstrates how important the returns from higher education can be for this country. From what I have heard, they will ensure that we have a viable steel industry that can go from strength to strength.
	Investment has already been mentioned, and we do indeed want to see investment, particularly in research and development. I worked in R and D for 15 years, so I know that it is essential to the steel industry's long-term and medium-term strategy. Here, the Government can play a very powerful role. I realise that we no longer intervene in the industry, but we can play our part. We should say, What can we do to give Tata support for R and D? Such support, which would ensure that our base here is maintained, is essential for all who work R and D.
	Tata has been well respected since it was first set up in 1907. It was one of the first companies in India to provide free health care for all its work force. My right hon. Friend the Member for Scunthorpe mentioned the Webbs' contribution, and I am sure that they had a hand somewhere along the line in that social provision. If one talks to the Tata work force in India, it is obvious that most of them love working for the company, which is one of the most respected companies in India. I feel strongly that this is a huge opportunity that is in the interests of our economy. It also shows a great confidence in British industry and our skilled work force, as well as in the Labour Government. Tata feels that under this Government the conditions are right to invest and ensure that the steel industry prospers in this country. Credit must go to the Government for managing a successful economy so that overseas investors have the confidence to invest.

Nia Griffith: Does my hon. Friend agree that a commitment from the Government to procurement would also inspire confidence in companies investing here?

Ashok Kumar: My hon. Friend makes a good point. Overseas investors have a great opportunity to invest here and India is the third largest investor in the UK after the US and Japan.
	I know that the Minister wishes to wind up now, so I shall conclude my remarks. We should have had a full debate on this important issue, not just an Adjournment debate, as I am sure that many other hon. Members would have wished to participate. Nevertheless, I am glad that we have been able to contribute to this debate and I congratulate again the hon. Member for Blaenau Gwent (Mr. Davies), although I do not share the pessimism that he articulated. I think that the steel industry has a great future.

Jim Fitzpatrick: I congratulate the hon. Member for Blaenau Gwent (Mr. Davies) on securing this debate on what is clearly an important issue for his constituents. It is also an important issue for my right hon. Friend the Member for Scunthorpe (Mr. Morley) and my hon. Friends the Members for Aberavon (Dr. Francis) and for Middlesbrough, South and East Cleveland (Dr. Kumar), who contributed to the debate. We have also had interventions from my hon. Friends the Members for West Bromwich, West (Mr. Bailey) and for Llanelli (Nia Griffith). I also note the attendance of my hon. Friend the Member for Ogmore (Huw Irranca-Davies), who as a Whip cannot contribute but who has volunteered for extra duties to be able to attend this evening. I also acknowledge the clear understanding that the hon. Member for Blaenau Gwent has of the industry and his long personal and professional involvement in it, with which obviously I cannot compete.
	This debate is very timely, as recent developments in the UK steel industry, particularly the battle for the ownership of Corus, have captured the imagination of just about anyone with an interest in the future of manufacturing in this country. The Tata deal is symbolic not only of the changes that are taking place in the global steel industry but of a fundamental and seismic shift in the economic world order.
	Despite significant restructuring over the past 30 years, the UK steel industry remains a significant employer and an intensive research and development contributor to the UK economy, and it underpins many parts of manufacturing and many local communities. High technology industries such aerospace, automotive and construction require high value steel products. The UK steel industry employs some 50,000 people directly. It also provides employment indirectly for many more who supply goods and services to the steel sector.
	The UK industry, the 17th largest in the world and fifth in Europe, produced 13.9 million tonnes of crude steel in 2006, the highest level of output for six years. Production is expected to increase by roughly a further 50 per cent. by 2010. According to the Office for National Statistics annual business inquiry, some 300 companies are engaged in the production of iron and steel. Around 50 per cent. of UK steel production is exported, with the EU as the main overseas market accounting for more than 60 per cent. of that total.
	Our ability to respond positively to globalisation will affect our future economic prosperity. It is a huge challenge, but also a great opportunity. The global economy has undergone radical change over the past 50 years, but the last decade has seen the greatest economic change since the industrial revolution of the 19th century. But what took 200 years to change in the industrial revolution is taking 20 years in the global revolution. For example, China's share of the global economy, which was just 0.5 per cent. in 1978 and 5 per cent. in 2005, is expected to grow to around 20 per cent. by 2015. That is in the space of less than 50 years.
	World steel demand has improved dramatically over the past four years, but the underlying global business environment will remain fiercely competitive for UK metal producers. Increased energy and raw materials prices have added to the pressures, which are set to intensify as rapidly expanding, low cost countries such as China, Russia, India and Brazil look set to increase their exports of steel products to Europe, including the UK.
	We believe that the strategies and measures implemented by UK steel producers mean that the steel industry is better placed than ever to cope with the rapidly changing global landscape. Between 2004 and 2006, Corus made investments totalling 330 million to improve quality and productivity. That was a real vote of confidence by the company in its employees and it resulted in a return to profitability. In 2004 the company announced that it was in profit for the first time since 1999. Pre-tax profits reached 580 million for 2005 and the consolidated share price rose from a low of 20p in 2003 to 375p in September 2006, prior to the takeover battle, as my hon. Friends said. That is a remarkable performance for a company that was considered to be on the verge of bankruptcy just three years earlier. The qualities of the work force that have brought about such a remarkable turnaround must bode well for the future of Corus's operations in the UK.
	Corus is not the only UK steel producer that is thriving. Following a management buyout in 2005, the management team at Sheffield Forgemasters fought to undo a long history of neglect and underinvestment to turn around the ailing business and build a strong international order book. Sheffield Forgemasters is now a major UK company with unique facilities and capabilities, supplying super clean metals and some of the largest castings and forgings in the world.

Elliot Morley: My hon. Friend has outlined a good case on the enormous investment and innovation in steel in this country. I know that my right hon. Friend the Chancellor has set up a 1 billion technology fund for training and innovation, but, if I may say what my hon. Friend cannot, I think that the Government have a role to play in supporting manufacturing.
	I would also be grateful if my hon. Friend acknowledged the presence of my hon. Friend the Member for Brigg and Goole (Mr. Cawsey), another Whip who cannot speak for himself.

Jim Fitzpatrick: As someone who served in the Whips' Office for four years, I am only too pleased to acknowledge the presence of my hon. Friend the Member for Brigg and Goole (Mr. Cawsey), given the restrictions placed on him by his office.
	My right hon. Friend the Member for Scunthorpe makes an important point, which echoes the point made by my hon. Friend the Member for Llanelli a moment ago. My hon. Friend the Member for Aberavon quoted the comments made by the Minister for Trade, my right hon. Friend the Member for Makerfield (Mr. McCartney), to the Trade and Industry Committee about the Government's commitment. I will certainly feed back the comments made tonight to my colleagues in the Department.
	As I was saying, Sheffield Forgemasters is supplying some of the largest castings and forgings in the world. Other investments include a new 80 million melt shop in Cardiffthe first of its type to be installed in the UK for more than 20 years. There is more good news for steel making in south Wales. A new colour coating line is going in at Falcon Steel in Newport. That is the first such equipment to be installed in 25 years. I notice that my hon. Friend the Member for Newport, West (Paul Flynn) is also in his place.
	The UK steel industry has also responded through innovation. British steel companies respond constantly to meet the challenge from competing materials to ensure that steel remains the material of choice for thousands of manufacturing applications. For example, 70 per cent. of the steels used in automotive production today did not exist 10 years ago. Corus is co-operating with leading world steel companies to develop ultra-light steel solutions for car designs to meet society's demands for safe, affordable, fuel efficient and environmentally responsible vehicles for the 21st century.
	The Department of Trade and Industry has enjoyed an excellent relationship with the UK steel sector over the years and, during that time, there has been regular contact between DTI Ministers and officials and senior industry representatives. The Government have embarked on a partnership with the UK materials industry to promote technology transfer, drive up productivity and help UK companies to move into higher-value-added products. The National Metals Technology Centre, located at the Corus Swinden laboratories in south Yorkshire, was the first initiative to emerge from that collaboration. The world-class technical facilities and expertise of Corus are now benefiting all of the UK metals industry. As a result, sales have increased, some jobs have been created and many others have been safeguarded. We have also created an industry-led umbrella organisation, Materials UK, to take forward the recommendations and strategy set out in the materials innovation and growth team report published in March 2006. We will continue to work closely with the UK metals industry on issues affecting the future prosperity of the sector.
	Compared with other major industrial sectors, the steel industry has been much more fragmented than its suppliers, its customers and producers of competing materials such as aluminium. Over the last few years, steel producers have looked to integrate horizontally with other mills and vertically with raw material suppliers and steel distributors to secure their futures. A key objective in steel industry consolidation is for producers to get more bargaining power, lower prices for raw materials, and more stable, if not higher, prices for finished products.
	In August 2005, Corus announced that it would seek opportunities for partnerships in countries with access to low-cost raw materials and high-growth markets in order to secure its future competitive position. On 30 January, Tata Steel of India outbid its rival, CSN of Brazil, with an offer to acquire Corus for 6.2 billion. We are pleased that a significant step has been taken to resolve the question of Corus's future ownership, which must have been a cause of great uncertainty for the company's employees and stakeholders. However, hon. Members will realise that it is now for the shareholders to decide on the merits of the Tata deal.
	According to Corus, the Tata deal would provide access to low-cost raw materials and to high-growth markets for products where Corus has a particular strength. That would enable the company to compete on a global scale, and thereby help to secure the future of plant and jobs located in the UK, particularly in the event of a downturn in the steel market. Corus is a leading supplier to many of the most demanding markets around the world, such as the automotive, aerospace, packaging, rail and engineering markets. The Tata takeover would offer Corus access to new and burgeoning markets for those products in India and Asia. There would also be opportunities for Corus to penetrate niche sectors in those markets, for example for its coated sheet products.
	Tata said that it would preserve agreed capexcapital expenditureplans, and would honour current employees' terms and conditions. It also said that it had no plans at present to cut jobs or change the location of Corus's main businesses. An advantage of the Tata deal is that the Corus senior management team will remain in place, offering Corus stability in the initial transition period. Under Tata's plans Philippe Varin, Corus's chief executive, is set to stay for two years.
	In its original offer, Tata made a number of proposals to ensure the long-term security of Corus pensions. They were discussed with and approved by the trustees, as several colleagues mentioned. Now that the announcement has been made on the recommended final offer for Corus, the pension trustees will meet Tata once again in order to develop the constructive discussions on pensions held earlier in the bidding process. Those earlier discussions resulted in a memorandum of understanding on pensions that will need to be looked at in the light of the revised offer. The memorandum includes various commitments to the schemes, including security measures to address the financing structure of the takeover arrangements.
	As regards the Corus engineering steels pension scheme, Tata has offered to make an immediate cash injection of 126 million to clear the accounting deficita point that was made by several colleagues in the debate. Normal expectations would be for a staged payment over a period of time. On the British Steel scheme, Tata will increase payments from 10 per cent. to 12 per cent. until March 2009. During these lengthy discussions, the trustees have been supported by a team of professional advisers. The pensions regulator has been kept closely informed of developments by the trustees throughout the process.
	Openness to investment, including through mergers and takeovers, is an inherent feature of a modern economy and an important driver of growth and innovation. The UK is regarded as one of the best places in the world in which to do business and foreign investment is making a major contribution to UK wealth. That means new jobs, with some 90,000 in 2005, which was an increase of 19 per cent. on the previous year. Many of those were high-quality, well-paid jobs. The production of many lower-cost, labour-intensive goods is now carried out in developing countries that have lower wages, while the UK is moving towards technology-driven production with high added value.
	I hope that hon. Members will be pleased to hear that the plans for the redevelopment of the former steelworks site are apparently well advanced. The project will produce long-term benefits for Ebbw Vale and the broader community in Blaenau Gwent. The 200 million redevelopment of the site, which is driven by the partnership between the local council and the Welsh Assembly Government, will create new places for living, working and recreation. It will provide office space, 500 new homes, a learning campus, a local general hospital, a primary school, a railway station and a wide range of arts and leisure facilities. The project will create 75 new jobs, as well as up to 25 trainee posts for local people who will gain skills in the sector.
	In addition, UK Steel Enterprise, a subsidiary of Corus, provides business finance and workspace in former steelmaking areas to encourage job creation. It has built the 30,000 sq ft Ebbw Vale innovation centre, which has been in operation for two years and is, I am advised, running at approximately 80 per cent. occupancy. Some 40 per cent. of the total costs of the project came from the European regional development fund and UK Steel Enterprise continues to finance the running costs of the innovation centre.
	The hon. Member for Blaenau Gwent called on Tata I am sure that he would say much the same to other steel companiesto develop training partnerships with other sectors and companies so that they can benefit from the steel industry's excellent training programmes. I am pleased to inform him and my hon. Friends that on 25 January my right hon. Friend the Secretary of State for Trade and Industry launched the national skills academy for manufacturing, The academy is about putting employers in the driving seat to develop more responsive ways of enabling them and their work forces to benefit from better skills. It will provide an opportunity for all manufacturing companies in the UK to gain access to world-class training through their regional contacts and supply chains. I am delighted that many UK leading manufacturing companies have demonstrated their support and leadership by becoming regional lead companies. Through the platform, any companylarge or smallwill be able to access the academy and what it has to offer. The sector skills council, which works with the steel industry on training and skills, is also directly involved in the academy. No doubt Tata will wish to build on the links.
	The Government accept that the closure of a steel plant can have an impact on other sectors, especially suppliers and contractors. Assistance for areas that are affected by steel closures is co-ordinated through the regional development agencies. The UK has a good record of bringing new investment to former steel-making areas. For example, in Corby, targeted Government assistance and inward investment promotion attracted a wide range of new activities following the closures in the early 1990s.
	It will be some time before Tata's operations will be in a position to supply slab to replace the output from Port Talbot's blast furnace operations, if indeed the company's plans for expansion in India and elsewhere come to fruition. In the meantime, Port Talbot will build on the success of recent investments and efficiency programmes to drive down costs further so that it can compete in the global marketplace.
	Teesside Cast Products is effectively a joint venture with a major purchasing consortium that is led by the Swiss-Italian based Duferco. The consortium, which also includes Italian, Korean and Mexican steel processors, purchases Teesside's output of slab under a 10-year off-take contract that commenced in late 2004. We have no reason to believe that Tata plans do anything other than to continue to honour that contract, which will secure the future of the plant until at least 2014.
	Although there have been no specific meetings with Ministers, the company and trade unions have kept DTI officials and advisers up to date as the situation has developed. Further meetings will be held if requested by Corus and the unions.
	It would not be appropriate for me comment on speculation about how Tata plans to finance its takeover of Corus. We have not seen any details as yet, and as far as we are aware the company has not made any final decisions on the matter.
	The hon. Gentleman and other colleagues raised the question of the EU emissions trading scheme. For phase II of the scheme, which runs from 2008 to 2012, the level of the overall quantity of allowances to be allocated in the UK represents an annual reduction of 29.3 million tonnes of carbon dioxide against projected business as usual emissions for the phase. The Government have carefully considered the ability of individual sectors to take on a reduction in allocation below business as usual, taking into account the extent to which a sector can pass on the costs of reducing emissions and the extent to which it is technically and economically feasible to abate emissions. We concluded that all sectors apart from the large electricity producers sector should get allocations equal to projected business as usual emissions.
	For phase II, therefore, the steel sector's cap will be set in accordance with its projected business as usual emissions. Those emissions projections include provision for the emissions of new entrants as they are based on output growth assumptions that relate to demand for a particular product, without regard to whether it has been produced by increased output at existing capacity or output from new capacity.
	The Government have introduced some policy changes in respect of eligibility for allowances for new entrants in phase II. In phase I, extensions in the iron and steel sector were eligible for allowances under an integrated approachthat is, where the extension increased the emissions of the site as a whole. We concluded that, for phase II, extensions should be eligible for allowances only where they involved a piece of equipment that directly produced emissions that had to be accounted for under the EU emissions trading scheme.
	We do not believe, however, that this change should discourage new investment, as allocations to new entrants need to be seen in the context of allocations to the steel sector as a whole. Although the benchmarks will in future provide much lower levels of allocation to expansions at existing plants, a move to a direct approach will also involve a reduction in the number of allowances that the steel sector has to provide to the new entrant reserve. Therefore, incumbent allocations will be higher as a resultthe existing installations will receive more of a sector cap that is growing to reflect the investments that are being made. Although Corus as a whole will be worse off under a direct approach, we estimate that its reduction in allowances would be very smallequivalent to around 1.3 per cent. of its allocation. That reduction is concentrated at one plant, Port Talbot; six others receive a higher allocation under a direct approach.
	We consulted on those proposals and have fully reflected on the responses that we received in finalising our plans. Overall, I believe that our policy encourages the cost of carbon to be taken into account and balances the different interests within the steel sector.
	The Government fully appreciate the impact that high and volatile energy prices have had on the operational effectiveness of industry, and the impact on jobs and investment ,which has been raised by a number of colleagues. However, the market has responded to tight supply by developing new gas import infrastructure, and there is now increasing interconnection between the UK and continental Europe and Norway, through the IUK, BBL and Langeled pipelines, and the new LNG terminal at Teesside.
	That has resulted in the wholesale price of gas falling significantly. Average day-ahead prices from January 2007 have fallen by 60 per cent. compared with January 2006, and are now at levels similar to those in January 2004 and January 2005. The average day-ahead price for the fourth quarter in 2006 fell by 52 per cent. compared with the average price in the same quarter in 2005. In addition, average forward prices for the fourth quarter in 2007 in January 2007 had fallen by 42 per cent. since they peaked in April 2006. Those trends also reflect convergence with gas prices in Europe.
	The Government have also been working to ensure that the market is able to maximise supplies of gas to the UK for this winter. The situation for industrial customers buying gas at current prices should therefore have eased. However, we recognise that gas prices remain uncomfortably high for users who negotiated contracts when the price was high. There has also been a large drop in wholesale electricity prices during the past year; for example, the average day-ahead base load price for January 2007 was 55 per cent. lower than the average price in January 2006. There has been a similar downward movement in price for future contracts: the January 2007 average price for delivery in the second quarter this year is 48 per cent. lower than the average second quarter price for 2006 reported in January of that year.
	I hope that I have covered most, if not all, of the points raised by the hon. Member for Blaenau Gwent, together with those raised by my hon. Friends, but I will be happy to write to colleagues if that is not the case. I emphasise again the overall positive tone with which the development has been welcomed by hon. Members in the Chamber this evening. I conclude by once more congratulating the hon. Member for Blaenau Gwent on securing this important debate and express my appreciation to my hon. Friends for their contributions.
	 Question put and agreed to.
	 Adjourned accordingly at fifteen minutes to Nine o'clock.